ASSET PROTECTION FOR BUSINESS OWNERS
James C. Mulder
attorney at law
What Is Asset Protection?
When people think of asset protection, they usually link it to keeping someone’s hard earned assets from being liquidated to pay for a successful creditor who has obtained a judgment against them for some contract dispute, negligence or unpaid debt. Unfortunately, at this stage it is usually too late to do any meaningful asset protection, because the horse has left the barn.
Asset protection is much more than protecting assets from a successful creditor in a lawsuit. It is:
- Knowing what assets you personally own that could be at risk
- Knowing what assets your business owns that could be at risk
- Knowing what business activities in which you are not directly involved that could cause a risk of loss of business assets or personal assets
- Planning to minimize the risk of loss
Asset protection is knowing what income tax effect will ensue from a particular business venture, activity or investment and subsequent sale and planning for the least amount of income tax. Asset protection is knowing what estate tax exposure your loved ones may have upon your death and planning to eliminate or reduce that tax.
Asset protection is knowing that there is a tax called the Generation Skipping Tax that can cost certain beneficiaries of your estate 50% of what you thought you were leaving them and then planning to minimize or eliminate that tax risk. Asset protection can involve planning for an elderly couple’s possible need for nursing home care. They want to protect as much of their assets for the spouse that can stay home while allowing for the government to assist in paying for the cost of a nursing home for the spouse that can no longer stay in the home.
Asset protection is planning to keep your children’s inheritance that you intend to leave them protected from a divorce, mismanagement, or loss to a judgment creditor or bankruptcy.
Asset protection is planning to stretch your IRA out as long as possible to maximize tax deferred growth and minimize income tax on withdrawal.
Asset protection involves planning first. Planning includes discussing all of the issues presented above and determining which, if any, of them cause you to sleep less at night or worry you.
For more information on the basics of asset protection for your business or family, contact WealthKeepers today at 713.461.9699 or info@WealthKeepers.net