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Asset Protection Considerations for Business Owners

February 14, 2022 Asset Protection

Protecting assets is a commonsense goal for most business owners. The first step to ensuring your business is properly protected is to understand what is considered an “asset” under the law. An asset is some type of resource that has economic value that the owner expects will provide a future benefit. An asset is something that is expected to either generate cash or reduce debt.  

Legal Documents and Tools for Protection of Business Assets

Protecting your business assets is done through a variety of legal mechanisms that vary according to what asset is being protected. Assets available for protection include:

  • Personal residence protection or homestead protection
  • Domestic business entities, such as LLCs and corporations, as opposed to a sole proprietor
  • Marital agreements; in other words, pre-nuptial and post-nuptial agreements
  • Annuities
  • Life insurance
  • Qualified retirement accounts, such as 401ks or IRAs 
  • Domestic trusts, such as revocable and irrevocable trusts
  • Domestic asset protection trusts (DAPTs). DAPTs are asset protection mechanisms that allow you to put certain assets out of the reach of creditors. They cannot be a part of any award being sought by a creditor’s legal judgment against you.

These asset protection mechanisms range from very strong (and more expensive) asset protection strategies to less strong (and cheaper). A sound asset protection plan will move you from the less protective (but cheaper) up through the stronger strategies as your assets increase.

What Assets Cannot be Protected

There are also common types of assets that offer very little or no protection, including:

  • Checking accounts
  • Savings accounts
  • CDs
  • Non-qualified investment accounts, such as trading accounts or mutual funds
  • Businesses owned as sole proprietorships or general partnerships, as opposed to businesses owned as separate entities, like LLCs and corporations, which protect your personal property. (If an LLC is sued and loses a money judgment, creditors may take the LLC’s assets, but they cannot take any member or shareholder’s personal property, as they could for a sole proprietorship or general partnership.)
  • Real property held in an individual’s name, except personal residences
  • Personal property held in an individual’s name

How Can Comiter, Singer, Baseman & Braun Help Protect My Assets?

Protecting an asset is the same as earning an asset but to properly do so requires a strategy to consider financial and tax implications. An experienced Florida and Palm Beach County asset protection lawyer at Comiter, Singer, Baseman & Braun can help you be sure that every asset is protected to the extent possible using the legal tools listed above that are the best options for each type of asset and appropriate for your income level.

At Comiter, Singer, Baseman & Braun, we understand how to develop a customized asset protection plan for your unique needs. We are also experienced with the laws involved in related areas of Florida law, such as estate planning, estate litigation, tax planning, probate, guardianship, mediation, and business entities and transactions. Contact us today.

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