When the average person hears the phrase “asset protection” it usually conjures images of law offices, complex paperwork and all manner of arcane strategies that are hard to explain and even harder to understand.
At its heart, it is less a legal strategy than it is a principle of wealth management. Wealth is by no means easy to acquire. What most people do not understand, however, is that wealth, once acquired, is even harder to preserve and protect, and while it might seem these things are easier for small business owners to handle, the truth is the small business owners, professionals, and their families are likely most vulnerable. Here is what you need to know about asset protection.
More Than Insurance & Lawyers
Wealth is threatened by many things. Litigation, taxes, theft, fraud and mismanagement are only a few of the ways a significant amount of value can be destroyed or lost. The news is replete with stories of people who, either through negligence or simply being overwhelmed, watched their savings, property and security drain away.
The good news is there are ways to avoid these problems, but this subject isn’t just about insurance and lawyers. As with most things, your strategy comes down to preparation, which is the first step in executing the major principle at work. At its core, it is no different than prudent investing. It is simply adhering to long-standing principles of fiduciary common sense.
The best way to imagine these principles at work is to imagine being the CEO of the company that owns your property. As an officer of the company, you have a fiduciary responsibility. Anything that violates your obligation is likely to violate the proper principles of protecting your wealth.
You Can’t Afford To Be Careless
It has been said that all great fortunes are stolen property. Most businesspeople will tell you any person or company who wants your wealth isn’t going to play fair, so you need to be prepared for the worst at all times. Insurance fraud? Not only possible but likely. Fake wire transfer from your bank? Happens every day. Stolen credit cards? Identity theft? Frivolous lawsuit? Data breach? Any one of these things can dramatically affect you and your company.
If you read the news, even casually, you will be made aware of all the reasons you need to invest maximum attention in protecting your assets.
Start With A Good Foundation
The first two steps in making sure your wealth and property are protected are to retain the services of a qualified accountant and then to retain a qualified attorney. While the attorney will be able to explain how to execute your plan, your accountant will tell you why you need a plan in the first place.
Among the many things you will be advised to consider, a properly constituted business entity will be near the top of the list. Your personal property needs to be protected from the vagaries of doing business, even with other companies. Second, you will have a chance to look at all the possible kinds of insurance policies you will need. Chief among these will be something called an “umbrella liability policy.” This will need to be as broad as possible, so as to cover the unexpected.
Third, you will probably be asked to value and secure your assets. Does your business have a logo? It should be trademarked. Has your business ever published something? No matter how humble, it should be formally copyrighted. Inventions? Get a patent going. Jewelry? Photographed and appraised. Contracts, licenses, key individual agreements? Notarized, filed with your attorney, appraised and valued so they can credibly appear on your balance sheet.
When these steps are taken, you will have a full-fledged high-level view of exactly where you stand. Then you will be in a far better position from which to craft an asset protection strategy.
Many mistakenly believe accountants are only good for adding up columns of numbers and filing tax returns. Nothing could be further from the truth. In today’s complex economy, accountants are among the most vital business advisors. Get in touch with Bedinghaus & Co, CPA today to build a strategy that will protect your wealth. When you understand what’s at stake, you’ll likely agree it was worth it.