By Ward J. Wilsey, JD, LLM<br />3655 Nobel Dr. Suite 345<br />San Diego, CA 92122<br />(858) 764-2672<br />wardwilsey@wils...
Protecting Business Owners<br />Insurance<br />Business Agreements<br />Entity<br />Segregated Business Ownership<br />Qua...
Insurance<br />Typical Client<br />Any small business owner<br />Reasons for Insurance<br />Protection<br />Bank Mandate<b...
Reasons for Insurance<br />Payment of Claims<br />Excess Liability may not be covered<br />Lawsuit Plaintiff may be willin...
Employee Insurance<br />Health Insurance<br />Disability Insurance<br />Employment Practices Liability<br />Key Employee<b...
Customer Insurance<br />Liability<br />Premises<br />Auto<br />Employee<br />Umbrella<br />
Business Operational Insurance<br />Business Interruption Insurance<br />Business Property Insurance<br />Key Employee<br ...
Business Agreements<br />Shareholder and/or Partnership Agreement<br />Buy Sell Agreement<br />Funded with Life Insurance ...
ENTITIES<br />
Types of Entities<br />Corporations<br />Limited Liability Company<br />Limited Partnership<br />Professional Corporation<...
Client Profile<br />If client has no other assets<br />Business makes over $100,000 per year<br />Business has liability o...
What Entities Protect<br />Entities Protect Against<br />Liability of Employees<br />Liability of Other Owners<br />Liabil...
C-Corporation<br />PROS<br />CONS<br />Oldest Type of Entity<br />Most case law<br />Limits Liability<br />Possible Tax Be...
S-Corporation<br />PROS<br />CONS<br />Same Limited Liability Benefits as C-Corp<br />No Double Taxation<br />$800 annual ...
LLC<br />PROS<br />CONS<br />Flexibility<br />Lack of Formalities<br />No Double Taxation<br />No Real Estate Transfer Tax...
Limited Partnership<br />PROS<br />CONS<br />Flexibility of LLC<br />Lack of Gross Receipts Tax<br />$800 Annual Californi...
Professional Entities<br />Limited Liability Partnership<br />Accountants, Attorneys, Architects<br />Similar to Limited P...
Segregated Business Ownership<br />
Segregated Business Ownership<br />Reasons<br />Remove Liability from Acts of Partners<br />Avoid Being Drawn into Lawsuit...
Use of Qualified Plans<br />
Qualified Plans<br />Tax Deductible Asset Protection Strategy<br />Bankruptcy<br />ERISA style plans receive unlimited pro...
Types of Qualified Plans to Explore<br />IRAs<br />Roth IRAs<br />401Ks<br />Simple and SEP IRAs<br />Traditional ERISA Pl...
Captive Insurance<br />Insurance Company formed by client to provide risk coverage<br />Operating Company pays premiums to...
Asset Protection Trusts<br />Domestic or Offshore<br />Control can be maintained via the use of client’s entity<br />Just ...
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Asset Protection For Business Owners

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Transcript of "Asset Protection For Business Owners"

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