Asset Protection
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Not the digital kind :) Last year, a business associate was recently taken to the cleaners b/c she was acting as a sole proprietor in her business. She failed to perform on a deal and rather than just fair restitution, judgments were placed on all of her personal and business assets. Pretty sad and scary at the same time. After seeing this, I called my attorney and wanted to make sure that something like this could never happen to my family. So, I am just about to finish the last of paperwork regarding protecting my personal assets from anything that may happen in my businesses and vice versa. I have to say, it's pretty wild. When we are done filing the paperwork with the county, state, Nevada, and two foreign countries I won't "own" anything; not even a checking account. Anybody else done this? I hate going to this extreme but case law really seems like it is over-compensating people for minor damages.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
MY mother did that after the fact. She had a super high credit score personal and one of her suppliers took her to the cleaners after robbing her of money (courts sided with him). Funny thing was my mother was personally held accountable for the judge's paid out amount even though it was her company and not her. She had to file bankruptcy with perfect credit. She got a good lawyer now and has gone through what you are going through. Aaron
_____________________________________________________________________ Our developers never release code. Rather, it tends to escape, pillaging the countryside all around. The Enlightenment Project (paraphrased comment) Visit Me at GISDevCafe
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Not the digital kind :) Last year, a business associate was recently taken to the cleaners b/c she was acting as a sole proprietor in her business. She failed to perform on a deal and rather than just fair restitution, judgments were placed on all of her personal and business assets. Pretty sad and scary at the same time. After seeing this, I called my attorney and wanted to make sure that something like this could never happen to my family. So, I am just about to finish the last of paperwork regarding protecting my personal assets from anything that may happen in my businesses and vice versa. I have to say, it's pretty wild. When we are done filing the paperwork with the county, state, Nevada, and two foreign countries I won't "own" anything; not even a checking account. Anybody else done this? I hate going to this extreme but case law really seems like it is over-compensating people for minor damages.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
I've always thought that if I started a business of any sort, incorporating or forming an LLC would be at least the very first thing I'd do. No way I'm exposing myself to the kind of liability that comes from a country of frivolous lawsuits and over the top judgements.
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Did you incorporate, or at least go LLC?
"A good athlete is the result of a good and worthy opponent." - David Crow
"To have a respect for ourselves guides our morals; to have deference for others governs our manners." - Laurence Sterne
All told, I have 6 LLCs, 1 Corp & 1 S-Corp. Not to mention a couple of trusts and a limited partnership. Before this process I had two LLCs. But, suprizingly is not enough if you have ever co-mingled your business and personal funds or if you a listed as an officer in the companies.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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My dad drives an 18-wheeler as an owner-operator, he incorporated as an LLC almost immediately for the same reason.
-- You have to explain to them [VB coders] what you mean by "typed". their first response is likely to be something like, "Of course my code is typed. Do you think i magically project it onto the screen with the power of my mind?" --- John Simmons / outlaw programmer
I had the LLCs in place prior to this process. But now, it is even further obscured who the partners are in the LLCs.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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MY mother did that after the fact. She had a super high credit score personal and one of her suppliers took her to the cleaners after robbing her of money (courts sided with him). Funny thing was my mother was personally held accountable for the judge's paid out amount even though it was her company and not her. She had to file bankruptcy with perfect credit. She got a good lawyer now and has gone through what you are going through. Aaron
_____________________________________________________________________ Our developers never release code. Rather, it tends to escape, pillaging the countryside all around. The Enlightenment Project (paraphrased comment) Visit Me at GISDevCafe
It is pretty wild and I've learned a lot in the last year working with my asset protection attorney and real estate attorneys. At first it was a big headache, now it's more or less a game.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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Not the digital kind :) Last year, a business associate was recently taken to the cleaners b/c she was acting as a sole proprietor in her business. She failed to perform on a deal and rather than just fair restitution, judgments were placed on all of her personal and business assets. Pretty sad and scary at the same time. After seeing this, I called my attorney and wanted to make sure that something like this could never happen to my family. So, I am just about to finish the last of paperwork regarding protecting my personal assets from anything that may happen in my businesses and vice versa. I have to say, it's pretty wild. When we are done filing the paperwork with the county, state, Nevada, and two foreign countries I won't "own" anything; not even a checking account. Anybody else done this? I hate going to this extreme but case law really seems like it is over-compensating people for minor damages.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
I will be doing this too sometime. So far my business exists only as a number, but I will have to do this eventually.
_________________________ Asu no koto o ieba, tenjo de nezumi ga warau. Talk about things of tomorrow and the mice in the ceiling laugh. (Japanese Proverb)
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I've always thought that if I started a business of any sort, incorporating or forming an LLC would be at least the very first thing I'd do. No way I'm exposing myself to the kind of liability that comes from a country of frivolous lawsuits and over the top judgements.
Same here. I had my LLCs in place prior to this process but we wanted to take it even further in case the "corporate vail" were ever to be pierced. Now, I am only an employee of my companies :) -- modified at 20:49 Tuesday 21st August, 2007
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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I did that when I was a photographer but I only worked in the US. Yeah, it's a headache.
_____________________________________________ Flea Market! It's just like...it's just like...A MINI-MALL!
leckey wrote:
I did that when I was a photographer but I only worked in the US.
Love photography. I think it is what I always wanted to do when I was in HS. But, Physics and programming swept me away. -- modified at 17:43 Tuesday 21st August, 2007
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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I will be doing this too sometime. So far my business exists only as a number, but I will have to do this eventually.
_________________________ Asu no koto o ieba, tenjo de nezumi ga warau. Talk about things of tomorrow and the mice in the ceiling laugh. (Japanese Proverb)
If I could offer some advice, I'd say do it before you get to into it. The fact that I have several real estate investments and a partnership in a car wash really complicated things. But, its pretty neat saying "I own nothing"
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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Not the digital kind :) Last year, a business associate was recently taken to the cleaners b/c she was acting as a sole proprietor in her business. She failed to perform on a deal and rather than just fair restitution, judgments were placed on all of her personal and business assets. Pretty sad and scary at the same time. After seeing this, I called my attorney and wanted to make sure that something like this could never happen to my family. So, I am just about to finish the last of paperwork regarding protecting my personal assets from anything that may happen in my businesses and vice versa. I have to say, it's pretty wild. When we are done filing the paperwork with the county, state, Nevada, and two foreign countries I won't "own" anything; not even a checking account. Anybody else done this? I hate going to this extreme but case law really seems like it is over-compensating people for minor damages.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
It's crap like this that makes me feel that Business Law 101 should be a required course for all university students, at least in the U.S.
Jon Sagara Once again, the conservative sandwich-heavy portfolio pays off for the hungry investor! *slurp* Oh, I'm ruined! -- Dr. Zoidberg .NET Blog | Personal Blog | Articles
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Not the digital kind :) Last year, a business associate was recently taken to the cleaners b/c she was acting as a sole proprietor in her business. She failed to perform on a deal and rather than just fair restitution, judgments were placed on all of her personal and business assets. Pretty sad and scary at the same time. After seeing this, I called my attorney and wanted to make sure that something like this could never happen to my family. So, I am just about to finish the last of paperwork regarding protecting my personal assets from anything that may happen in my businesses and vice versa. I have to say, it's pretty wild. When we are done filing the paperwork with the county, state, Nevada, and two foreign countries I won't "own" anything; not even a checking account. Anybody else done this? I hate going to this extreme but case law really seems like it is over-compensating people for minor damages.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
No. That's stupid. I incorporated and I separated my business withholdings from my personal. I purchased $2,000,000 of liability insurance for my business and I made sure that my personal stuff was entirely separate from by business. I had an attorney review everything and he said it was all done right and properly. I had placed a legal barrier to protect my personal life.
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It's crap like this that makes me feel that Business Law 101 should be a required course for all university students, at least in the U.S.
Jon Sagara Once again, the conservative sandwich-heavy portfolio pays off for the hungry investor! *slurp* Oh, I'm ruined! -- Dr. Zoidberg .NET Blog | Personal Blog | Articles
I agree 100%. We also kept telling her she needed to at least move to a LLC but she didn't listen.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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No. That's stupid. I incorporated and I separated my business withholdings from my personal. I purchased $2,000,000 of liability insurance for my business and I made sure that my personal stuff was entirely separate from by business. I had an attorney review everything and he said it was all done right and properly. I had placed a legal barrier to protect my personal life.
code-frog wrote:
I purchased $2,000,000 of liability insurance for my business and I made sure that my personal stuff was entirely separate from by business.
I've had the umbrella liability policy in place even before I started doing business. But, after seeing this happen I took matters to the extreme. Like I said, everything of any value is will soon a different entity's property.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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code-frog wrote:
I purchased $2,000,000 of liability insurance for my business and I made sure that my personal stuff was entirely separate from by business.
I've had the umbrella liability policy in place even before I started doing business. But, after seeing this happen I took matters to the extreme. Like I said, everything of any value is will soon a different entity's property.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
Well I admit that anymore nothing is safe and the people you can trust least are those that pass the judgments so in that regard it's probably best to have no actual value. I guess what gets me curious is if you don't own anything you are going to have a very hard time borrowing anything. So hopefully you never need a loan for your business.
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Well I admit that anymore nothing is safe and the people you can trust least are those that pass the judgments so in that regard it's probably best to have no actual value. I guess what gets me curious is if you don't own anything you are going to have a very hard time borrowing anything. So hopefully you never need a loan for your business.
Ahh this is why I paid an attorney, my business has lots of assets, and pays me a salary, dividends and health care. All of my income goes to accounts owned by a limited family partnership of which I am a bennificiary. It's not the simplest thing but, proof of income is not an issue. Also, this is why stated loans and unsecured lines of credit exist.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
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Ahh this is why I paid an attorney, my business has lots of assets, and pays me a salary, dividends and health care. All of my income goes to accounts owned by a limited family partnership of which I am a bennificiary. It's not the simplest thing but, proof of income is not an issue. Also, this is why stated loans and unsecured lines of credit exist.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
Okay, so that's what I did exactly. But I didn't have the obscurity of a family and a beneficiary. I set it up where I'm an employee of my business. I have a separate checking account. I have absolutely separate assets and liabilities and each month I get a paycheck from my corporation which is free standing. It's not attached to me at all really. I'm an employee that gets a pay check for a set amount. My accountant is the one who told me how to do it all. He told how to incorporate, which forms to use and how to have my articles of incorporation prepared so that my personal life is really not connected at all with my business holdings. Right now with the financial PITA we are in from Katie and related stuff I'm having to fix a bunch of things. Mainly as a business I didn't have a credit history so I'm not credit worthy until I had been in business for 3 years. As a result I had to purchase stuff for my business on personal credit or with personal loans, etc... Now I'm actually securing business loans to pay off those personal credit/loans/etc... to further abstract my personal life from my business. The road map for me has been pretty clear and the only real hiccup was no history as a business so no ability to get loans etc... Now that I've been around for 3 years that's not an issue. So my abstraction is pretty much complete. If we were not in such a PITA right now I could do even more but have been advised to go slow. Make changes, wait a bit make a few more changes and let each change simmer so I don't look to shaky to creditors and such. My articles of incorporation and my accountants divestment of my personal holdings from my business have made a very hard line in the sand and from what I can see jumping that line won't be easy especially with the various forms of insurance and other policies I've obtained.
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If I could offer some advice, I'd say do it before you get to into it. The fact that I have several real estate investments and a partnership in a car wash really complicated things. But, its pretty neat saying "I own nothing"
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
Chris Austin wrote:
If I could offer some advice, I'd say do it before you get to into it.
I will per se, but I can't yet. There is going to have to be some fine timing with this. A couple things have to happen first, and then I will jump into that. Probably the business will not start, but the option to may have, so we'll have to see.
_________________________ Asu no koto o ieba, tenjo de nezumi ga warau. Talk about things of tomorrow and the mice in the ceiling laugh. (Japanese Proverb)
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Not the digital kind :) Last year, a business associate was recently taken to the cleaners b/c she was acting as a sole proprietor in her business. She failed to perform on a deal and rather than just fair restitution, judgments were placed on all of her personal and business assets. Pretty sad and scary at the same time. After seeing this, I called my attorney and wanted to make sure that something like this could never happen to my family. So, I am just about to finish the last of paperwork regarding protecting my personal assets from anything that may happen in my businesses and vice versa. I have to say, it's pretty wild. When we are done filing the paperwork with the county, state, Nevada, and two foreign countries I won't "own" anything; not even a checking account. Anybody else done this? I hate going to this extreme but case law really seems like it is over-compensating people for minor damages.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
The other thing that I try to do is get a limitation of liability clause in any agreement I sign. It is not always possible, but often is. I always explain that I have $2 million of liability insurance and I would like a clause that explicitly limits any liability claim to that amount. After the initial uneasy quiet response I argue that this is really responsible risk management on their part, that if there is a way that I can really cause $10 or $20 million damage to them, then they should cover it in some other way as there is no way that they can recover it all from me. How hard you argue depends on your leverage.
Peter "Until the invention of the computer, the machine gun was the device that enabled humans to make the most mistakes in the smallest amount of time."
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Same here. I had my LLCs in place prior to this process but we wanted to take it even further in case the "corporate vail" were ever to be pierced. Now, I am only an employee of my companies :) -- modified at 20:49 Tuesday 21st August, 2007
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long
Chris Austin wrote:
we wanted to take it even further in case the "corporate vale" were ever to be pierced. Now, I am only an employee of my companies
Forgive my ignorance - I've only made a cursory examination of the issue.. what is involved in taking things further? I'm curious because I might need to know one day :)
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The other thing that I try to do is get a limitation of liability clause in any agreement I sign. It is not always possible, but often is. I always explain that I have $2 million of liability insurance and I would like a clause that explicitly limits any liability claim to that amount. After the initial uneasy quiet response I argue that this is really responsible risk management on their part, that if there is a way that I can really cause $10 or $20 million damage to them, then they should cover it in some other way as there is no way that they can recover it all from me. How hard you argue depends on your leverage.
Peter "Until the invention of the computer, the machine gun was the device that enabled humans to make the most mistakes in the smallest amount of time."
Very prudent. I attempt to use a similar "sole remedy" clause in every contract.
My Blog A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - -Lazarus Long