Asset Protection For Business Owners
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Asset Protection For Business Owners

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    Asset Protection For Business Owners Asset Protection For Business Owners Presentation Transcript

    • By Ward J. Wilsey, JD, LLM
      3655 Nobel Dr. Suite 345
      San Diego, CA 92122
      (858) 764-2672
      wardwilsey@wilseylaw.com
      The Wilsey Law Firm www.wilseylaw.com
      Asset Protection for Business Owners
    • Protecting Business Owners
      Insurance
      Business Agreements
      Entity
      Segregated Business Ownership
      Qualified Plan
      Captive Insurance Program
      Domestic and Offshore Asset Protection Trusts
    • Insurance
      Typical Client
      Any small business owner
      Reasons for Insurance
      Protection
      Bank Mandate
      Types
      Mandated
      Unemployment and Social Security
      Workman’s Compensation
      Optional
      Employee
      Customers
      Operation
    • Reasons for Insurance
      Payment of Claims
      Excess Liability may not be covered
      Lawsuit Plaintiff may be willing to settle at policy limits
      Legal Fees
      Insurance company does not want to lose!
      Requirement for Doing Business
      Bank loans
      Malpractice required for insurers
    • Employee Insurance
      Health Insurance
      Disability Insurance
      Employment Practices Liability
      Key Employee
      Disability
      Life
    • Customer Insurance
      Liability
      Premises
      Auto
      Employee
      Umbrella
    • Business Operational Insurance
      Business Interruption Insurance
      Business Property Insurance
      Key Employee
      Life Insurance
    • Business Agreements
      Shareholder and/or Partnership Agreement
      Buy Sell Agreement
      Funded with Life Insurance or Liquid Assets
    • ENTITIES
    • Types of Entities
      Corporations
      Limited Liability Company
      Limited Partnership
      Professional Corporation
      Limited Liability Partnership
    • Client Profile
      If client has no other assets
      Business makes over $100,000 per year
      Business has liability other than that imposed by owner
      If client has assets
      Entity should always be used
    • What Entities Protect
      Entities Protect Against
      Liability of Employees
      Liability of Other Owners
      Liability of Premises
      Contractual Liabilities
      What Entities Do Not Protect Against
      Liability of Self
    • C-Corporation
      PROS
      CONS
      Oldest Type of Entity
      Most case law
      Limits Liability
      Possible Tax Benefits
      Possible Self Employment Tax Savings
      $800 annual fee from California
      Possible Double Taxation, especially for successful companies
      Capital Gains for Real Estate Transfers
    • S-Corporation
      PROS
      CONS
      Same Limited Liability Benefits as C-Corp
      No Double Taxation
      $800 annual fee from California
      Capital Gains for Real Estate Transfers
      Lack of some Fringe Benefits like C Corp
      Limited to 75 Shareholders
      Shareholders must be Citizens or Resident Aliens
    • LLC
      PROS
      CONS
      Flexibility
      Lack of Formalities
      No Double Taxation
      No Real Estate Transfer Taxes
      Possible Charging Order Protection
      $800 Annual Fee
      Gross Receipts Tax
    • Limited Partnership
      PROS
      CONS
      Flexibility of LLC
      Lack of Gross Receipts Tax
      $800 Annual California Fee
      GP required
      GP has liability
    • Professional Entities
      Limited Liability Partnership
      Accountants, Attorneys, Architects
      Similar to Limited Partnership
      Used more often by Accountants and Lawyers because “Partner” historically has more prestige
      Professional Corporation
      Simpler
    • Segregated Business Ownership
    • Segregated Business Ownership
      Reasons
      Remove Liability from Acts of Partners
      Avoid Being Drawn into Lawsuits
      Consider forming corporation to make loans to businesses instead of outright ownership
      Possibly convertible debt
      Remove Ability of Creditors to go after assets of company
      Instead, form separate entity to own assets, have those assets rented to main entity
      Equipment
      Receivables
      Possibilities are endless
    • Use of Qualified Plans
    • Qualified Plans
      Tax Deductible Asset Protection Strategy
      Bankruptcy
      ERISA style plans receive unlimited protection
      IRAs (Traditional or Roth) receive up to $1,000,000
      SEPs are not subject to limitations
      Rollovers are not subject to limitations
      Non-Bankruptcy
      only protected to the extent reasonably necessary for the support of the debtor and any dependent of the debtor
    • Types of Qualified Plans to Explore
      IRAs
      Roth IRAs
      401Ks
      Simple and SEP IRAs
      Traditional ERISA Plans
      412(i) Defined Benefit Plans
      419A(f)(6) Employee Benefit Plans
      419(e) Welfare Benefit Plans
    • Captive Insurance
      Insurance Company formed by client to provide risk coverage
      Operating Company pays premiums to Insurer, who in turn insures the Operating Company
      Premiums can be structured to be tax deductible
      Half of U.S. states have captive enabling statutes
      Most popular jurisdiction is Vermont
      Does not have to be offshore, although Bermuda is a popular choice
      Irrevocable Trust could own captive
      Move money outside of the client’s estates
      Best for larger businesses paying over $200,000 a year in premiums
    • Asset Protection Trusts
      Domestic or Offshore
      Control can be maintained via the use of client’s entity
      Just transfer percentage of business to Domestic or Offshore Trust
      Distributions from company now are distributed to Asset Protection Trust
      Result is that those distributions are protected from creditors
      Poor man’s version can be done for married couples using Family Gifting Trusts
      Reduces costs