(Newswire.net — July 6, 2020) — Given how important asset protection is, it is startling how few people, especially business owners, have an asset protection plan in place. The reality is that running a business comes with many risks and if you wish to protect yourself from risk as much as possible, then asset protection is key.
Jon Parrish of Naples, Florida, owns, operates, and manages Oceanic Blue Retreats, LLC as a managing member and several other business entities in the hospitality industry. He outlines what asset protection is and why it’s so important.
What is Asset Protection?
Asset protection is a form of financial planning, where the goal is to protect one’s assets from creditor claims or even lawsuits. Asset protection applies to both individuals and businesses and is important if you wish to limit creditors’ access to valuable assets, such as a piece of real estate or a car. Different strategies used in asset protection planning include separate legal structures or arrangements, such as trusts, partnerships, or corporations. If you fail to create an asset protection plan, business owners open themselves up to several risks. For example, debts and mortgage obligations to third parties, consumer protection issues, claims for damages caused by your employees, and product or professional liability are a handful of the risks that you may have to tackle. In addition, Jon Parrish notes that asset protection isn’t just for struggling businesses. Rather, even successful businesses should protect their assets in the event that things go south.
Why is Asset Protection Important?
The goal of asset protection planning is to significantly reduce (or ideally prevent) risk by protecting both one’s business and personal assets from creditor claims. An asset protection plan uses legal strategies to deter someone from making a claim, or to help prevent the seizure of your assets after a judgment. In almost all cases, you want the asset protection plan to be in place before a problem such as a lawsuit arises. In essence, says Jon Parrish, the longer the plan has been in place, the stronger it will be. Small business owners in particular are unaware of the potential risks and thus are often the most vulnerable. When it comes to deciding which asset protection planning structure is right for you, it will depend on the type of assets you own, as well as on the types of creditors most likely to pursue a claim against you.
Types of Assets
As mentioned above, in order to create a successful asset protection plan, you’re going to first need to take stock of what your assets are and understand what category they fall into. For example, be wary of dangerous assets, which by their very nature are the most prone to liability. Dangerous assets include real estate, commercial property, and business assets like vehicles, tools, or equipment. Conversely, safe assets are far less prone to liability and these include assets like stocks, bonds, or individually owned bank accounts. One general piece of advice Jon Parrish offers is to keep your assets as separate as possible. For example, he never recommends combining the ownership of two dangerous assets, or a dangerous asset with a safe asset. Ultimately, keeping the ownership of your assets separate will limit your losses, should you have any.
The Time is Now, Says Jon Parrish
If you are a business owner who is reading this and doesn’t have an asset protection plan in place, Jon Parrish urges you to act now. You don’t want to wind up putting it off until it’s too late. To help people better understand its importance, Parrish likens asset protection to insurance. He asserts that asset protection is like a type of insurance policy that ensures your most important assets will remain in your hands even after a lawsuit or the death of the asset owner. Ultimately, asset protection has endless benefits and no downsides. If you want to ensure that what you own remains yours, no matter the circumstances, then asset protection is for you.