Do you own a business? Do you have assets or wealth that you want to safeguard into the future?
One thing that business owners must ask themselves is ‘what happens if something happens to the business or me?’ This is where effective asset protection strategies come in.
What is an asset protection strategy?
Asset protection refers to planning to reduce the potential for any person or creditor to have the ability to access assets and value. Therefore, protecting assets.
For businesses, an asset protection strategy is designed to protect assets such as your business property, vehicles, equipment or wealth in general so it stays in the hands of people you want it to.
But, it’s important to note that there is no ‘one size fits all’ asset protection strategy. Having asset protection strategies personalised to your business can mean the difference between success and failure.
Why is an asset protection strategy important?
As a business, wealth protection is essential, and asset protection acts as a form of risk management. We are in a highly litigious society, with a lot of risks. If you’re in business or have built wealth, these risks might result in someone attempting to access your assets and value if you leave it exposed.
For example, in the event of legal action, such as a defamation claim, you could be forced to settle on tough terms if you’re caught without an asset protection strategy in place.
But crises like this can be averted; with appropriate trust structures, asset protection strategies and equity protection plans, you can secure your wealth and safeguard your assets.
Which assets do I need to protect?
As part of your business entity, you may have tangible assets such as the business property, company vehicles or equipment along with general wealth, but assets can be intangible too.
Intellectual property (IP) can be just as important to protect as these can relate to specific products, services, and operations unique to your brand.
It’s essential to work with an asset protection professional to get a complete picture of your business assets; otherwise, there can be devastating outcomes if a creditor makes a claim and you’re not adequately protected.
When should I start looking into asset protection?
Asset protection strategies should be implemented as soon as you start your business, not just when you start acquiring assets or wealth.
As your business grows, so too should your asset protection strategy. It’s an ever-evolving process, and we recommend undertaking regular asset protection reviews to ensure you’re covered.
If a claim happens and you don’t have asset protection strategies in place, it can often be too late.
What is involved in an asset protection strategy?
When setting up an asset protection strategy, we need to isolate assets and value from relevant risks. This can involve putting passive income-producing assets, such as shares, rental properties etc, and other valuable assets into a separate structure.
Separating and segmenting multiple sources of risk, so that should an exposure occur in one activity, it does not contaminate and put unrelated activities (i.e. different businesses in different business structures) at risk.
Another key facet of an asset protection strategy is ensuring that ‘at risk’ individuals do not hold or control assets. This can be done by transferring or protecting legal ownership of valuable assets from at-risk individuals to lower risk entities.
Successful asset protection strategies and planning can include the ability for at-risk individuals and their families to control and benefit from assets without legally owning them.
The benefit of this is that should something occur that results in the at-risk individual becoming subject to liabilities or claims from creditors, the assets are not available to satisfy the debts protecting family wealth – even if a creditor is successful.
Business lawsuits, family disputes and financial setbacks can be avoided, so don’t let your business suffer. Get your asset protection strategy in place with one of our asset protection accountants today and feel in control moving into the future. Get in touch with PCR Accounting & Advisory today on 03 9847 7516.
Owner of PCR Accounting & Advisory, Peter Marmara-Stewart is a top-tier accountant and financial advisor dedicated to helping clients reach their business goals and achieve financial freedom. Peter is highly regarded for his client-focused approach and entrepreneurial spirit, catering to a diverse range of professionals across a wide scope of industries all across the country. Peter’s expertise can help you plan effectively, set goals, maximise profits and protect your assets. Get in touch today on (03) 9847 7516.