Asset Protection

Tue, 14 Jul 2007 15:30:18 -0400

This article will focus on the more practical aspects and results of Asset Protection planning, touching on the underlying substantive law only in passing. There are literally dozens of various asset protection structures in use today. The general proposition underlying asset protection is that a creditor can reach any asset owned by a debtor (with some statutory exemptions like the homestead exemption and certain types of retirement plans, see Asset Protection), but cannot reach assets not owned by the debtor. The term "foreign trust" usually means an irrevocable trust domiciled in and governed by the laws of a foreign jurisdiction.

Several different factors determine the nature and the type of planning that should be used for a given client. Even if we assume that a bank would lend an amount sufficient to eliminate 100% of the equity, the cost of this asset protection technique is staggering. The use of these entities is not an absolute shield against creditors, because a creditor cannot be forced to go away. The debtor has two asset protection choices: (i) do nothing and stand to lose all assets when the plaintiff becomes a creditor, or (ii) engage in some asset protection planning.(see Asset Planning)

When it comes to paying taxes to the government then Asset Management and proper accounting practices are especially important. Something that may seem minor to you, may be very important when it comes to disclosing your final figures, a tiny indiscretion may turn up in an audit. This can happen to you years after the actual event. It is also worth keeping your books exact and detailed this will help should you need to apply for a loan or a small business grant in the future. They will need to know all of your assets and if you have all the proper documentation, and books with accurate records, you will be able to easily prove you are a reliable member of the business community.

Asset management also means tracking physical assets, some small businesses may not realize just how many assets they actually have. Anything that holds some sort of monetary value, or can be sold, is considered an asset. This includes you probably know that any computers, chairs computer desks and so on.(see Asset Attorney Protection) You should be looking around to see if you have more assets than you originally thought.