Springfield will become home to Wonders of Wildlife, an anticipated world-class attraction opening in the busy intersection of Sunshine Street and Campbell Avenue. The attraction will be surrounded by many businesses which, as one developer hopes, will bring a great deal of traffic and business in the area. Another source of heavy traffic is the fishing and hunting mega-store, Bass Pro Shop. When it comes to businesses, it is important for owners to take advantage of the many asset protection strategies available.
The intersection of Sunshine Street and Campbell Avenue has changed
According to an interview with Dr. Michael Pfander of Cottage Veterinary Hospital, there have been some very substantial changes to the area over the years. His business is the oldest on that corner, opened back in 1952 by his parents. He can still recall when, “Sunshine Street was the city limits, Campbell Street south of Sunshine was a gravel road. And where Bass Pro is today there was a large dairy farm.”
Four businesses at that intersection will be torn down and/or relocated to make way for the Wonders of Wildlife. A new development featuring restaurants and retail businesses will be completed a few months after the Wonders of Wildlife museum and aquarium opens on September 21st.
What are the best asset protection strategies?
While you may not be considering the need for asset protection now, if you have substantial wealth, there are several asset protection strategies that you should know about. This is also true if you anticipate receiving an inheritance, lawsuit settlement or judgment, sale of stock options, or there is some other situation that will dramatically increase your wealth.
Increase your liability insurance
Your first line of defense against potential litigation, especially if you own a business or work in a professional field such as medicine or the law, is liability insurance. If you don’t have coverage already, obtaining coverage should be a priority. If you already have a liability policy, consider increasing your liability limits. The key is to make sure your personal umbrella liability coverage is at least equal to your new net worth. It is usually wise to take care of this before you actually receive the inheritance or settlement.
Create an irrevocable trust
Protection from creditors can be accomplished with different types of trusts, but the most efficient type is an irrevocable trust. When a trust is “irrevocable” that means the terms of the trust cannot be modified or rescinded once it has been created. When you transfer your property to the trust, that property then belongs to the trust. Because it is irrevocable, the assets are no longer considered yours. As a result, that property is no longer subject your creditors or other legal liabilities. Irrevocable trusts are a great way to protect assets that you do not presently have a need for.
Any money you deposit into a joint account with your spouse, child, parents, roommate, or business partner is at risk based on any liabilities that other person may have. For example, if your business partner files for divorce or incurs a lawsuit judgment, the entire account could be wiped out, including your portion. If you must have a joint account, keep the balance as low as possible.
Formalize any informal business partnerships
Business partnerships can easily be a source of liability. Why? Similar to joint accounts, you are responsible for the actions of your partner, which includes any liabilities. However, unlike a joint account, a lawsuit against your partner can put all of your assets at risk. For instance, if you and a friend come to an informal agreement to provide consulting services and your “partner” is involved in a legal dispute regarding your consulting services, your personal assets could likewise be at risk. The best advice is to avoid basic partnerships and create an LLC or other business entity that will provide you with legal protection.
Create business entities to protect your assets
If you own a small business or do part-time work on the side without a formal business structure such as an LLC or a corporation, then you are operating as a sole proprietorship. Although being a sole proprietor means it’s just you, unlike a partnership, all of your personal assets are at risk if you are sued because there is no real delineation between you and the business. So, be sure to create a business entity that will protect your personal assets from lawsuits against your business.
Speak to your attorney about all possible asset protection strategies
Estate planning can accomplish many things, including protecting your assets. Guarding your property against creditors is essential to preserving your estate for your heirs. Creditors include bill collectors and anyone else who may have a legal judgment against you. Everyone can benefit from an asset protection plan, but you must create that plan before it is too late.
If you have questions regarding business asset protection strategies or any other asset protection planning matters, please contact the experienced attorneys at Gaughan & Connealy for a consultation. You can contact us either online or by calling us at (913) 262-2000. We are here to help!