Asset protection and business planning may sound like complicated concepts, but our attorney walks you through what you need to know so that your family is protected and you know exactly what to do with your business and assets when the time comes.
If you are establishing a small business, it is important to utilize the right structure to protect your personal assets. There are different ways to go about it, and the right choice will depend on the nature of the business and your overall situation. We can provide the guidance that you need to make the ideal choice.
Limited Liability Companies
A limited liability is a very commonly used structure that can provide a strong level of asset protection for business people. When you establish an LLC, there would be a distinct degree of legal separation between your company as an entity and you as an individual.
In most instances, if the business was the target of a lawsuit, your personal property would be out of the reach of the litigant. You also enjoy pass-through taxation, which means that you can claim the business profit and losses on your individual income tax returns.
Family Limited Partnerships
Another powerful asset protection structure is the family limited partnership (FLP). When you establish this type of partnership, you would be the general partner with total decision-making authority. Members of your family that you choose to add would be limited partners.
Once again, assets in the partnership would be separate from your own personal resources. To provide an example, let’s say that you own an apartment building. You could convey it into a family limited partnership, and the partnership would become the owner.
If someone is injured on the property and a lawsuit is filed, they could only sue the partnership; resources that are personally owned by the partners would be protected.
The reverse dynamic is true as well. Your apartment building would be protected if any member of the partnership is sued.
Small Business Succession Planning
When you have been running a successful business for years, you may start to think about developing a succession plan. It can be tricky, especially if you have a business partner or partners.
What happens if a partner passes away and the other partners want to continue running the business as usual? To address this type of situation, you could utilize a buy-sell agreement.
Simply put, each partner would take out life insurance policies on every other that pay out an amount that is equal to the value of a share in the business. After the death of a partner, the insurance policy proceeds would be used to purchase that partner’s share from their family.
Inheritance balancing is another succession planning challenge. If you want to leave your business to one of your children after you are gone, what about their siblings? This is another situation that can be resolved through the utilization of life insurance.
These are a couple of scenarios that can exist, but we can provide a solution for all business people. There are many tools in the estate planning toolkit, and there is an optimal approach to suit every situation.
Get the Guidance You Need!
When you choose the Montgomery Law Firm, you will receive top-notch representation on every level. We fine-tune our solutions to perfectly match the needs of each respective client, and we consistently receive positive feedback from the people that we assist.
We have experience counseling clients that operate all different sorts of businesses, so our capabilities are comprehensive. Our firm is definitely up to the task whether it is a simple, straightforward situation or something that is quite complex.
If you are ready to make the ideal legal connection for assistance with asset protection and business planning, you can schedule a consultation if you call us at 843-815-8580. You can also reach out to our estate planning attorney, Hunter Montgomery online using our contact page.
