When you strike off on your own as a small business owner or the owner of a professional practice, to a certain extent you are living the dream. You have the power to make decisions on your own, and the possibilities are endless.
However, you do have to be concerned about those who may want to take what you have earned. Asset protection is important for business owners, and there are various structures that can be used to keep your resources out of harm’s way. One of them is a limited liability company.
Protecting Your Personal Assets
The idea is to separate your personal assets from the assets that are held by your business. A limited liability company can create this separation.
Your business would be a limited liability company. If there were any legal actions against the business (as opposed to you personally), your personal assets could not be targeted so you can go forward with peace of mind.
While you do enjoy the asset protection benefits of a company, your taxes are not complicated by the creation of a limited liability company. You enjoy flow-through taxation so you could claim the profits and losses from a limited liability company on your personal income tax return.
Avoid Fraudulent Conveyances
One thing to understand about a limited liability company is that you cannot use this legal structure to “close the barn door after the horse has left” so to speak. If you create a limited liability company after you become aware that you are being targeted by litigants, this could be construed as a fraudulent conveyance. This type of transfer is illegal.
Learn More About Limited Liability Companies
Without question, you should take steps to protect your assets when you are the owner of a business or professional practice. We live in a litigious society, and there are many people out there who are looking for successful individuals that they perceive as deep pocket targets.
For many, a limited liability company can be a good choice. If you would like to learn more about these asset protection structures, we have a very useful resource that you can access through this website.
Our firm has prepared a series of special reports that cover various different estate planning, elder law, and financial planning topics. One of these in-depth reports is devoted to the subject of limited liability companies.
To access your copy of the report, which is being offered on a complimentary basis at the present time, visit this page and follow the simple instructions: Free Report on Limited Liability Companies.
Family Limited Partnerships
Another asset protection structure that many people use is the family limited partnership. With this type of partnership, the person who is establishing the structure is called the general partner. Limited partners are added by the general partner, and these partners must be family members.
The general partner has the sole decision-making authority. Assets that are held by the partnership cannot be attached if one of the partners is personally sued. Plus, if a legal action is brought against the partnership, the personal property of the partners would be protected.
To explain by way of example, let’s say that you own an apartment building. You establish a family limited partnership and you convey the building into the partnership. If someone gets injured on the property, your personal property and personal property that is owned by the rest of the partners would be shielded from legal judgments.
If you own multiple rental properties, you could potentially convey each property into a separate family limited partnership. In this manner, if someone gets injured on one piece of property, the other properties would be protected.
In addition to our report on limited liability companies, we have prepared an in-depth report that will tell you everything that you need to know about family limited partnerships. This report is also free, and you can get your copy here: Family Limited Partnership Report.
Schedule a Free Consultation
Written information can go a long way, but we are standing by to help if you are ready to discuss your asset protection needs with a licensed estate planning attorney. We provide no obligation consultations to our neighbors here in the greater Ashland, KY area, and we would be glad to assist you.
You can give us a call at (606) 324-5516 to schedule a consultation. If you would prefer to get in touch with us electronically, simply send us a message through our contact page.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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