If a lawsuit is filed against your business, you probably have anxiety and stress over the consequences. If it wasn’t bad enough that you must immerse yourself in business litigation, you also have to worry about protecting your assets.
Not only is it possible that all your hard work and best efforts will be for nothing, but your assets might also be at stake. Whether or not your personal property will be in danger depends on your business model and insurance coverage.
How Can You Protect Personal Property if Your Business Is Sued?
If your firm is sued, you may protect your assets with an adequate asset protection plan. One size does not fit all, so you might want to consider the best option for your business. Here are some asset protection options you might choose from:
- A strong foundation goes a long way. Decide a corporate structure that is appropriate for your company. It includes carefully considering the company’s growth, tax liability, legal obligations, and administrative burdens.
- Set up a strict financial boundary between your work and your personal expenses. It’s recommended that you keep your money and checking accounts completely separate.
- Legal contracts hold infinite power and finite information to protect your personal property.
- Business insurance is a must. Choose a policy that fits well with your business type and protects your personal assets.
- Set up an irrevocable trust that safeguards business interests and your personal assets.
While all the above asset protection methods are self-explanatory, setting up a trust requires some added explanation for better understanding.
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A Trust Can Protect Your Personal Assets
When your assets are associated with a trust, it will offer protection against creditors, litigation, and other forms of legal action. The trust assets are administered by a trustee, who has the last word on how they are used.
Your trust should be irrevocable if you want to shield your personal assets from legal claims against your company. This implies that once a trust is established, its terms cannot be altered, and the trust itself can’t be modified or terminated without the employment of a trust protector.
The setting up of a trust can be overwhelming for you. This is where we can help. The legal aspect of setting up and its operations are all handled by our commercial litigation lawyers. We assist you in making the right choice of trust. The various types of trust available are:
- Trust for asset protection
- Trust for life insurance
- Trust holding personal residence
- Trust that is irrevocable
Forming a corporation, limited liability company (LLC), or another legal company structure is another step you may take as part of an asset protection strategy. It might help shield your personal assets from a business dispute. Combining this with a trust to safeguard assets is highly recommended.
Limited Liability Strategy
If an entrepreneur doesn’t want to form a corporation or an LLC, the most common choice is to operate as a single proprietor. A sole proprietorship may be less formal and easier to establish, but it does not shield your personal assets from creditor claims or bankruptcy.
If a sole proprietorship is sued, the owner’s own assets will be in danger. In contrast, a Limited Liability Company’s owner will not be held personally responsible for the damages. If a company goes bankrupt, its creditors may only seize the company’s assets and not the owner’s money or belongings.
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The Role of an Attorney in Protecting Your Personal Property
While it’s understandable that you’d feel anxious, overwhelmed, and angry after being sued, keep in mind that your company’s name is on the line. Competitors, displeased customers, and even suppliers might file a lawsuit. The specific legal issue being litigated might be anything from employment discrimination to a breach of contract.
In any legal matter, the first thing you should do is get in touch with an attorney. The next step is notifying your insurance company that you are being sued. Many policies exist to protect their policyholders from legal action. It is time to begin drafting a response to the lawsuit and searching for a defense attorney to assist you in prevailing.
Create Your Personalized Asset Protection Plan
Our lawyers at the Buzbee Law Firm are well-versed in tailoring asset protection strategies to individual client requirements. We collaborate with you to fully grasp your worries and choose the best course of action to provide you with the comfort you deserve.
By learning about your company, your loved ones, and your requirements, we tailor a solution to safeguard your personal property. Your house, collections, and savings may all be protected against the danger of company liability with the help of a customized plan we can create for you.
Consult Our Texas Business Lawyers for Legal Assistance
When a corporate or commercial dispute arises in Texas, it’s important to have access to the best legal representation possible. The time, effort, and money spent defending a firm in court is a major obstacle. Unless you have unlimited time and money, you probably want these problems handled as soon as possible.
We at the Buzbee Law Firm know that your company is one of your most prized possessions and an integral part of your life’s success. Our Texas commercial litigation lawyers are prepared to represent you in every form of business issue. Contact us to assist you in safeguarding your personal property if your business is sued.