What if someone sues you
You could say that there is no reason for someone to sue you. And while that might be a legitimate claim, business owners get lawsuits all the time. The fact that a request is unfounded does not mean that you will not have to live it. What’s worse, the cases are stressful and a financial disaster, even if you did nothing wrong.
The way to mitigate the possibility of being sued and the long-term impact of an unnecessary lawsuit is through a formal asset protection planning process.
It is a pre-litigation risk management practice intended to detect and discourage lawsuits that may arise. If this is not possible, then asset protection planning seeks a compromise in both parties’ best interests.
You may already be doing things to protect your assets from the impact of litigation, but many entrepreneurs don’t do it holistically, leaving their asset protection plans out of reach. Keeping this in mind, here are some steps to design a complete program to shield your assets.
Start with risk insurance
Secure your resources is by having the law firm insurance protection against chances, both for you and your business. Many organizations have the right insurance because it gives a lot of consideration but, entrepreneurs usually do not pays much attention. They buy an overture, review their list of financial procedures, and get on with their lives. And this also happens to other kinds of insurance.
For example, many owners often claim to have coverage against business risks but usually do not know that their business will be affected if they receive a personal lawsuit.
A solution to this would be to have a personal policy as an umbrella, which is usually the least expensive way to protect your wealth, business included. But many entrepreneurs, especially the most successful, have inadequate coverage, or their policies do not cover what they need. The reason is that many insurers mark the size of their umbrella policies at $ 55 million, and any severe accident will cost you more than that. “If the net worth of the business owner, including his shares in the company, is more than $ 5 million, there can be serious consequences. In this case, the answer is to have an even bigger policy,” says Joseph Weiss, risk insurance authority at Bruce Gendelman Insurance Services.
Legal strategies for frivolous lawsuits
Once you’ve made sure you have risk coverage for yourself and your business, there are several legal strategies you can opt to protect your money and business from superficial or frivolous lawsuits.
One option is to consider an asset protection fund. Those that appear in these types of funds are usually out of reach of creditors. Peter Sasaki, manager of the SDS Family Office, cautions “the regulations on these funds vary greatly, depending on each country. Knowing how they work in your jurisdiction is essential”.
You could also consider opening several corporate entities to isolate different assets. For example, if you have several companies, the idea is to put them in separate corporate structures. Thus, a claim will only be on one company and will not affect the others. There is a strategy widely used in businesses in which each property has its corporate entity.
The best legal strategy will depend on each scenario. However you probably have a good number of options to help you protect and shield your assets.
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