When you’re a lifelong hard worker who amassed businesses and assets, it’s a great achievement if you’re able to maintain them in good standing even through difficult times. Thus, it’s even more sensible if you’ll also want to protect them from uncertainties. The last thing you’d want is for the fruits of your labor to disappear or be mishandled by the wrong people, especially when you’re no longer around. There are many horror stories of well-established names in various industries who have lost all they worked hard for, simply because they haven’t taken measures to protect them.
Fortunately, protecting your assets doesn’t have to feel like such a difficult task to accomplish. There are several ways of being proactive about this decision. This article gives you some of the best ways to protect your business and assets.
1. Have an estate plan
Death is indeed inevitable; the only uncertainty is when it will happen. If you’re wise and prudent enough, you’ll be one of those strategists who will have an estate plan made when you’re still mentally able and alive.
An estate plan involves all the tasks involved in managing your asset base upon your death. This includes the bequeathal of your assets to specific and rightful heirs, and the settlement of estate taxes. With an estate plan, you’re guaranteed that all your assets are distributed in the manner that you desire, and not according to what the state will dictate in case you have none.
Thus, here are added compelling reasons why having an estate plan is beneficial:
- It protects your beneficiaries, whereby all your assets are in the hands of the rightful heirs
- It protects your young children, especially when you suddenly leave minors behind
- It counters the likelihood of family disputes from happening
Learn more about estate planning from the experts before finalizing details with your lawyer.
2. Purchase insurance coverage
The insurance market is lucrative for a good reason: more professionals, both employees and entrepreneurs, see the benefit of having one. It may be an added expense for now, but should an emergency happen, it’s nice to know that you have an umbrella for protection.
You need to protect your income, savings, and assets, and getting insurance is still one of the best ways to do it. Fortunately, there are several kinds of insurance products in the market today. These also come at different price ranges, so you’re guaranteed that there will be something to suit your budget. Your choice of insurance policies will depend on the kinds of assets that you have, so this is also something that you’ll have to consider.
3. Keep your corporate veil
Maintaining your corporate veil means separating your business and your personal account. For instance, make sure to use the checkbooks with the company name when dealing with business-related matters. Never merge anything with your personal account.
Even if you’re a small business owner, it’s still worth taking this path for the following reasons:
- It’s easier to go through the business management process, whereby personal and corporate assets and liabilities are made separate and clear
- It makes the accounting process clearer, where you also have a clearer determination of what assets belong to the business and what belongs to you on a personal capacity
- It can protect your personal account from business creditors
This step is really effective in protecting your personal assets just in case your business goes bankrupt. When this happens, creditors can go through your personal assets if you didn’t separate them.
Keeping separate books for your corporate and personal accounts is even more crucial when you co-own businesses with other entrepreneurs. If any of these co-owners will commit fraud against the company, your personal assets won’t suffer.
4. Avoid a divorce, whenever possible
This strategy may seem like strange advice, but it actually makes sense. If you aren’t married, then this shouldn’t be a problem. But if you’re married, you may also want to try avoiding getting divorced if possible.
Not all marriages are going to work out well, yes. But if you can find a way to fix the marriage first before immediately jumping into a divorce, then give it a try. Paying for a therapist is still cheaper than losing a significant portion of your assets on a divorce settlement.
Along this line, another prudent advice to follow is to have a prenuptial agreement made before getting married. It’s not about trust issues, but more of sound financial planning. You both don’t have to be millionaires to have one made. A prenuptial agreement can iron out any possible difficulties that may arise should your marriage turn sour. That way, you’re also able to protect all the assets that you’ve acquired before the wedding.
5. Apply for a homestead exemption
Homestead exemption refers to protecting the family home against creditors in the event of a bankruptcy. This concept means that creditors can go after all your other assets save for your house.
While the homestead exemption doesn’t protect all your other assets, at least it protects your family’s house. That way, should you have creditors running after you, you don’t necessarily lose everything.
6. Track your spending
This piece of advice is also one of the most obvious that you can follow. Once you already have quite a substantial amount of savings and assets to your name, it can be very tempting to live a happy-go-lucky life and keep on spending. You might think that you’re not going to lose money anyway, and that your assets will remain intact.
This kind of mindset might be dangerous to harbor. Losing track of how much you’re spending is a sure-fire way to easily fall into a substantial amount of debt.
Even if you already have a stable business, savings account, and assets, try to track your spending, all the time. Monitor various types of expenses, from minor ones to big-ticket purchases. In doing so, you will know exactly where your hard-earned money went.
These suggestions are only some of the most effective ways to protect the assets that you’ve worked hard to acquire. Gone are the days when only multi-millionaires will have to think about taking this prudent step. For as long as you have multiple assets and a business to leave behind, it’s good to take these extra steps to protect them. Beyond just thinking of the many ways in which you can earn more, take the time to think of the different ways to protect your hard-earned business and assets.