Asset Protection for Business Owners

Asset Protection for Business Owners is an Oxymoron; Protected Assets aren't Owned by People

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Don’t get caught holding your business when things go bad. Use the powerful Ultra Trust® to insulate from creditors and frivolous lawsuits.

Asset protection for business owners is rarely a major consideration when someone starts a business. There are many ways to own a business, but owners probably shouldn’t own it directly at all. A business owner can be a sole practitioner, own the business through shares of an LLC, LLP, or LFP or even own a corporation by merely acting as if they own it. All of these methods among others have one thing in common: a connection to the owner. If a business is sued and the plaintiff’s lawyer is worth their fee, they will certainly try to attach the owner’s personal assets to the case.
Lawyers have gotten smart regarding piercing the corporate veil. All they have to show is that the business isn’t separate from the owner. The poor owner could have used the business checking a few times to take his children out to the movies or regularly used the business vehicle to drive around in or simply not financed the business properly [see; Kinney Shoe Corp. v. Polan 939 F.2d 209 (4th Cir. 1991); Ridge Clearing & Outsourcing Solutions, Inc., v. Khashoggi, No. 07 Civ. 6611(RJH), (2011) ]. Many things connect the business to the personal assets of the owner… in fact, probably too many to keep track of and too many pitfalls not to find oneself stuck in one. Here are some common examples:
  1. commingling of funds and other assets
  2. the treatment by an individual of the assets of the corporation as his own, [see; Ted Harrison Oil Co. v. Dokka, 617 N.E.2d 898, 901 (Ill. App. Ct. 1993)]
  3. the failure to maintain minutes or adequate corporate records
  4. the use of the same office or business location, employment of the same employees and/or attorney
  5. the failure to adequately capitalize a corporation, and
  6. the use of a corporation for a single venture.
  7. fraud, [see; Colandrea v. Colandrea, 42 Md. App. 421, (1979)]
Using these same theories, a business doesn’t have to have a lawsuit filed by an injured party or a damaged party either. The business could be sued for debt. Many people lost their businesses during the recent recession. Many debtors and bankruptcy trustees went after the personal assets of the business owners to satisfy the debts. Not only did people lose their business and income, but they may have lost their personal savings and possessions too. These issues probably make one think twice about going into business again or starting a business in the first place.
Instead of thinking twice, they should start a business they don’t own. Why, would anyone want to start a business they don’t own? Well, for starters, it keeps the lawsuits out of one’s personal bank accounts. If a person doesn’t own the business, then they can’t get sued with the business. How does one run a business one doesn’t own? They do it with one of the greatest asset protection tools in the toolbox: the Ultra Trust®. This is how it works. You take a startup business, worth virtually nothing, form an LLC and place it in an UltraTrust®.
The Ultra Trust® owns the company and the Ultra Trust® is managed by an independent trustee (one who is not related by blood). The trust and the LLC need someone to run the business, so they hire the creator of the business. The person who created the business receives a salary and the business grows inside the trust. Now, when it comes time to pass the multi-million dollar business on to their children it passes estate and/or gift tax free, because the gift was already made to the trust when the business was about worthless.
Ok, now back to asset protection. If the same lawyer mentioned earlier comes after the business in the Ultra Trust® and tries to go after personal assets, the court takes one look at the Ultra Trust® documents and sees that the trust owns the company, and throws out the attack on the personal assets. The Ultra Trust® has insulated personal assets against the attack. The Ultra Trust® also works in reverse! If one is sued personally, the business is safe because it is owned by the Ultra Trust®.
The Ultra Trust® is specifically designed to stop creditors and people filing frivolous lawsuits from gaining access to personal assets. The Ultra Trust® allows for the most protection with the largest amount of flexibility. Each one is tailored to the grantor’s needs. The Ultra Trust® is a powerful tool to protect families from financial attack.
Call us today at 888.938.5872 to learn how you can protect your business assets.
Category: Asset Protection

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