Creating a business can be very risky especially when the personal assets of a person are involved. Usually, people who own businesses get some loans in order to set it up and start operations. However, some businesses do not produce that much profits right away which will make the owner have a hard time paying back the loans. If he would want to prevent creditors from touching his personal assets, then he must do asset protection planning early.
Before one would even attempt to protect his assets, he must first have some basic ideas on his rights under the law. He should always have a lawyer beside him so that he can get advice on certain situations. One thing to note is that corporations may protect the assets of the shareholders because it is a separate entity. However, those who are sole proprietors or in partnerships may have their personal assets taken.
Although this is the general rule provided by the law, there are a few loopholes wherein creditors may play. For that reason, it is important to be extra careful and add more layers of protection. Lawyers will be able to help with this.
To avoid any conflict with the creditors, obviously the best way would be to settle all the debts on time. However, there will be times that people would forget that they have a debt to someone and when he is being run after, he is not prepared. The way to handle that would be write a list of assets and debts. The list should also be updated regularly.
According to the law, some certain assets absolutely cannot be touched by creditors. Now just because some assets are protected does not mean that all of them are. For this kind of situation, it is best for one to look into protective entities like trusts. A move like this will enable him to protect his assets even though creditors are going after them.
Although it is stated above that corporations may protect the assets of its shareholders, there are instances when it does not apply. One would be if there is fraud involved and another would be if one signs a personal guarantee. A personal guarantee is a pledge for the borrower to take responsibility for the entire debt. What one can do is either avoid this sort of deal or put a time limit if he is desperate for a loan.
Buying insurance policies is also another effective strategy. In the worst case scenario wherein he has no cash to pay his creditor, he may take money from the insurance. Through this strategy, the creditors have no chance to get a hold of his personal assets.
Basically, those are some ways for one to safeguard all of his assets from being taken. As early as now, one should already do some asset protection planning so that he is not taken by surprise in the future. The earlier he plans the safer all his things will be.
Before one would even attempt to protect his assets, he must first have some basic ideas on his rights under the law. He should always have a lawyer beside him so that he can get advice on certain situations. One thing to note is that corporations may protect the assets of the shareholders because it is a separate entity. However, those who are sole proprietors or in partnerships may have their personal assets taken.
Although this is the general rule provided by the law, there are a few loopholes wherein creditors may play. For that reason, it is important to be extra careful and add more layers of protection. Lawyers will be able to help with this.
To avoid any conflict with the creditors, obviously the best way would be to settle all the debts on time. However, there will be times that people would forget that they have a debt to someone and when he is being run after, he is not prepared. The way to handle that would be write a list of assets and debts. The list should also be updated regularly.
According to the law, some certain assets absolutely cannot be touched by creditors. Now just because some assets are protected does not mean that all of them are. For this kind of situation, it is best for one to look into protective entities like trusts. A move like this will enable him to protect his assets even though creditors are going after them.
Although it is stated above that corporations may protect the assets of its shareholders, there are instances when it does not apply. One would be if there is fraud involved and another would be if one signs a personal guarantee. A personal guarantee is a pledge for the borrower to take responsibility for the entire debt. What one can do is either avoid this sort of deal or put a time limit if he is desperate for a loan.
Buying insurance policies is also another effective strategy. In the worst case scenario wherein he has no cash to pay his creditor, he may take money from the insurance. Through this strategy, the creditors have no chance to get a hold of his personal assets.
Basically, those are some ways for one to safeguard all of his assets from being taken. As early as now, one should already do some asset protection planning so that he is not taken by surprise in the future. The earlier he plans the safer all his things will be.
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