What happens if you are sued, and lose, and the judgment amount is large enough to be really painful, and not covered by insurance? Perhaps it could even force you into personal bankruptcy. Or severely damage your business’s ability to continue in operation.
The complexities and complications associated with this topic present challenges even for experienced practitioners who can advise you, including your attorney, accountant and insurance agent. But before you pick up the phone to schedule an appointment,
some preliminary assessments might be in order.
- What kind of risks do you face, both personally and for your business? The type of risks, some estimate of the maximum payments you might be subject to, and the coverage aspects of your business insurance are among the factors you should consider.
- How likely is it that you could be exposed to liability? If your business does not engage in dangerous or risky activities that could significantly affect the type and amount of insurance that you need. Businesses with exactly the same annual sales and number of employees might have significantly different liability-exposure profiles depending on the products or services they provide.
- What are the assets you need to protect? Where are they physically located? Who owns them (that is, you personally, or your incorporated business)?
- Talk with some of your friends and business associates who own small businesses in roughly the same size range as yours.
Accumulating that kind of information before you schedule appointment with an advisor can yield big dividends in minimizing your costs to obtain the advice you need.
Finally, remember this: if you wait until you’ve been sued in order to design and maintain a good asset protection plan can be a serious mistake, and very damaging to your business. Whatever protective measures you undertake at that time will most likely be labeled as a “fraudulent transfer” and will provide little or no real protection. “An ounce of prevention is worth a pound of cure.”
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
