We can help you get the legal protection needed to safeguard your assets.
A business can be structured as a sole proprietorship, partnership, LLC, or corporation. Each structure carries with it different tax advantages/disadvantages, liability protection, and corporate governance requirements. A sole proprietorship is the least formal business structure and has the least amount of liability protection. General partnerships likewise provide limited to no liability protection for the general partners. However, some partnership structures do offer liability protection as a limited liability partnership (LLP) or a limited partnership (LP). An Limited Liability Company (LLC) is a hybrid between a partnership and a corporation and is very common in many jurisdictions for small businesses. The LLC and its members receive liability protection like a corporation while functioning under many of the general partnership governance and taxation principles. A Corporation generally receives liability protection. Even if your business is structured properly, liability protection is not guaranteed and may be loss if the owners commit fraud, co-mingle funds or take other action inconsistent with a stand alone, separate, entity. We can help you pick the business structure best for your situation.
Irrevocable Trusts can be used as part of an asset protection plan. The idea behind using a Irrevocable Trust as an asset protection tools is that once the assets are transferred to the Irrevocable Trust, such assets are out of reach of from the Grantor/Settlor’s creditors. Creating a trust does not automatically exempt you from paying creditors, and transfers to a trust may be subject claw back clauses and fraud claims in a lawsuit or in bankruptcy court. However, a properly created and implemented trust provide substantial protection for ongoing and future activities. Also, provisions of the Irrevocable Trust can restrict disbursements to beneficiaries thus keeping the assets out of the reach of a beneficiary’s creditor’s hands. In order to remove assets from creditors’ reach, the Grantor/Settlor may lose substantial control of the asset and a Trustee receive full control. Irrevocable Trusts can be complicated and have tax and maintenance consequences as well. We can explain the positive and negative uses of an Irrevocable Trust and help you apply such consequences to your individual situation.
FAMILY LIMITED PARTNERSHIPS
A Family Limited Partnership (FLP) is used to protect assets and transfer wealth from one generation to another. A FLP includes two types of partners. The general partner(s) run the business and control the FLP assets. The limited partners are similar to shareholders in a corporation. They are silent with limited management rights and control. A FLP is often used as a holding company for the family assets or businesses. One major benefit to using a FLP is that a limited partner interest in a FLP can be transferred to another family member at a discounted rate, as opposed to transferring the actual asset owned by the FLP. This may allow an owner with substantial wealth to effectively use his/her exemptions to transfer a higher percentage of assets to family members than he/she otherwise could. We can help you decide if a FLP is best for your family.
A land trust can be a revocable or irrevocable trust. Most land trusts are revocable and provide no asset protection value. However, use of a revocable land trust may help provide anonymity and make ownership of property (or business entity) difficult for creditors or others to locate. Irrevocable trusts used to hold real property will provide asset protection and anonymity if used correctly, and often in conjunction with a business entity. All land trusts must follow the state trust laws for creation, operation, duties, and powers of the parities involved. We can explain the different types of land trusts and help you determine whether a land trust is best for you.
A DBA (Doing Business As) designation does not provide asset protection. A DBA can be used by sole proprietors, partnerships, or other business entities. A DBA is registered with the state and/or county. Although the DBA itself is easily researched (to identify the underlying person or entity) a DBA can be helpful to brand your business, shorten a business name, distinguish business departments and identify separate business functions in a Series LLC. We can help you register your DBA today.