HAVE YOU COVERED YOUR A$$ETS? BILL WALSTON
Separate
your
assets.
is
contract (like taking out a loan). Although you
unfortunate, lawsuits are a reality and effective
were not there when the deal was made, as a
asset protection has to address the potential fallout
general partner you will be responsible.
of these lawsuits. Whether it’s a rental property, a
today’s litigious society, it’s a high-risk way of
restaurant, or something else, segregate your risk.
doing business. Don’t do it!!
Although
it
In
Consider creating a separate corporate or limited
liability entity for each liability generating asset or
Properly insure yourself against loss.
group of assets.
matter how confident you feel about your asset
No
protection plan, good insurance is an absolute
For example, if you own several income producing
necessity,
rental properties, you should consider separating
homeowners’ policy and everything in between.
the properties into two or more limited liability
Under-insuring leaves you and your assets at
companies and form yet another entity as the
risk.
from
car
insurance
to
your
commercial operation for property management. If
you own a portfolio of liquid investments like
stocks, bonds, options, or commodities, you should
hold them in their own entity.
Consider Uncle Sam.
Nothing can shrink
your assets faster or have a greater impact on
your wealth accumulation than the dreaded
Also, never mix liability generating assets. For
example, an apartment house should not be
owned by the same entity that owns a restaurant.
income tax. The entities you select to hold your
assets should provide not only liability protection,
but also tax protection.
By separating your assets, you limit your risk to
only the one entity.
Avoid general partnerships.
In this form of
business, you’re personally liable for all debts or
other business liabilities the partnership incurs.
General partnerships allow each partner a great
deal of authority over one another. If you are in a
general partnership, your partner can make major
decisions and agreements on behalf of the
partnership without consulting you, regardless of
what your partnership agreement may state. Any
general partner can commit the partnership (and
hence every other general partner) to any legal
A flashy lifestyle
is like chum in the water
to lawsuit-happy lawyers
and litigants