The Second Law of Thermodynamics is oftentimes referred to as the rule of entropy, roughly: things tend toward chaos. It turns out that the same principal holds true for businesses. Chaos in business is litigation.
You maintain your home, automobile and golf clubs, right? If you are a small business owner, then you simply cannot have your greatest personal and family asset destroyed my entropy - eroded, chipped away or swallowed whole by litigants or creditors.
No, you need a plan to protect your business as an asset.
Protecting a business requires a certain kind of thinking and planning. Unfortunately, most business owners simply have not done their due diligence with asset protection planning in Overland Park and elsewhere.
Even if you are in the know, it is worth reading the recent Private Wealth article addressing this important topic, “Asset Protection For Business Owners.”
Asset protection is always begins with assessing the risks to the asset itself.
The primary risks to any successful business are litigants and creditors seeking a piece of the pie. No one really likes or trusts creditors, but far and away it is litigation that can take down a thriving operation. To be a threat, the lawsuit need not even be “legitimate” if the litigation is against the business itself. While we are at it, do not look past personal litigation or divorce.
Nevertheless, how you structure the assets of the business and the business itself can shield you, your family, and the wealth tied up in the business from being taken down. But here is the catch: a plan in place is often a saving grace where the plan left on the chalkboard is always just wishful thinking.
Here is a telling statistic shared in the original article: “About 89.7% of these business owners said they are concerned about such lawsuits, but only 26.9% have an asset-protection plan.” Why so few?
Whatever the source of risk to the business as an asset, there are a wide variety of strategies that can be employed to limit or eliminate the risk. A powerful protection might even stop a suit dead in its tracks long before a plaintiff engages the court! Trust me, the potential trial lawyers on the other side will do their due diligence (and they never drill a dry well) before they file a lawsuit against you.
To ensure the broadest and deepest protection, your asset protection plan must be developed with all the variables in mind and by a seasoned professional. Above all, however, this essential planning must be completed before it is really needed. So do not tarry and leave your business at risk.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Private Wealth (March7, 2014) “Asset Protection For Business Owners”