How To Protect Your Business Assets From Future LawsuitsShare this post
With a proactive asset protection plan, you can prevent the loss of assets due to lawsuits. The Chicago estate planning attorneys at Anthony J. Madonia & Associates, Ltd. can help you implement strategies that minimize losses in case of future lawsuits. By meeting with our team of experienced attorneys, you can accomplish the following goals:
- Encourage favorable settlements
- Transfer assets beyond the reach of creditors
- Provide income for family and business interests
- Minimize taxes
Here, we will focus on strategies to keep your business assets safe from adverse litigation outcomes.
How To Protect Your Business Assets From a Lawsuit
By purchasing insurance, setting up a trust, creating the right business structure, and planning for your retirement, you can ensure your wealth goes back into the business or to family members, not probate court. However, it is crucial to take proactive steps because once you are in a lawsuit, it is too late to use most of these strategies to shield your assets.
There are types of insurance that directly address the threat of future lawsuits. Consider adding errors and omission insurance, especially if you are a business working directly with clients.
Some policies provide coverage over your insurance limit if you lose a professional liability or malpractice lawsuit. Cyber liability insurance can protect you from the consequences of data breaches. Although insurance is the critical first line of protection, you will need additional strategies to prevent the loss of your business and wealth following a lawsuit.
Set Up a DAPT
A Domestic Asset Protection Trust (DAPT) can protect your business assets from creditors. Although laws and availability vary by state, a DAPT provides multiple layers of protection. However, it is important to partner with the right estate planning attorneys in Chicago to ensure that you properly structure and fund it. Otherwise, potential plaintiffs can challenge its enforceability, especially if they live in another state.
While Illinois does not allow DAPTs, you can set one up through a business headquartered in another state. Note that each state is likely to enforce its own laws, so a DAPT should form one pillar of your business asset protection strategy.
Create an Offshore Trust
In some cases, you can set up an offshore trust to further protect your business assets. Only certain countries allow this type of trust. Offshore trusts are irrevocable and come with inherent risks. However, most nations allow them to permit the recovery of assets following the settlement of the lawsuit.
Create an LLC
Our attorneys can also help you create the appropriate business structure for protecting assets from lawsuits. You can distribute wealth to family members without losing control of the company through the formation of a limited liability company (LLC). After setting up the LLC, you will need to transfer assets to the new company. Also, by setting up limited partnerships for family members and yourself, you maintain control over your assets.
Make Retirement Plan Contributions
Contributing to qualifying retirement plans shields your assets from creditors. This is also a good way to prepare for retirement.
Let Our Chicago Estate Planning Attorneys Assist You to Protect Your Business
Now that you understand how to protect your assets from a lawsuit, it is important to partner with the right Chicago estate planning attorneys to safeguard your wealth on all levels. At Anthony J. Madonia & Associates, Ltd., we have the tenacity, experience, and talent to represent your interests, including protecting your business assets from future lawsuits. Contact us today to set up a no-obligation consultation to discuss your needs.