Asset Protection
Asset protection for new businesses
It is important to get advice before you establish a business about the type of legal or business structure which will best protect both your business and personal assets.
But that alone is not enough. You need to ensure that you are protected by appropriate contracts as well. For example, it is critically important to have a written contract with your business 'partners' (see Shareholders Agreement below) and to make sure you have contracts with other businesses which will protect you (see Contract Law).
Asset protection for existing businesses
If the appropriate steps were not taken when you started the business, the sooner you do something to rectify it the better. This applies not only to the legal or business structure but also to getting the right contracts in place. If you have any doubt as to whether you and your business are adequately protected, we are happy to provide some preliminary advice for you free-of-charge (Contact Us).
The role of a company in asset protection
Most people think a company will protect them against personal liability. It is a good start, and a lot safer than operating as a sole trader or in partnership, but it is still not enough (see Risk Management below).
Trust (with a corporate trustee)
Operating a business in the form of a discretionary or unit trust with a corporate trustee means that a company is actually running the business on behalf of the trust but the assets of the business can be owned in a way which provides flexibility (in the case of a discretionary trust) and provides tax advantages relating to capital gains tax savings when the business is sold (in the case of a unit trust).
Shareholders' or unitholders' agreement
It is ironic that so many people choose to use a company or trust to reduce the risk of being personally liable but at the same time expose themselves to another form of personal risk. This is because they fail to get legal advice on an appropriate shareholders agreement which sets out the rights and obligations of the owners or partners. See Shareholders agreement.
Separation of assets
If the business owns, or will own, valuable assets, it is important to have a legal or business structure which separates the ownership of the assets from the trading company. This is for the simple reason that if the trading company gets into financial difficulties, the assets will not be affected. This applies to assets such as real estate, software, technology and other intellectual property.
The way this is done is to have the valuable assets owned by a separate company, or trust, which then licenses the use of those assets to the trading company.
Risk management
Your business is probably one of your most valuable assets. So it's worth spending a bit of time on risk management.
People don't expect anything to go wrong so they often don't bother to take a few simple steps to prevent problems arising. Problems such as partnership disputes, shareholder squabbles or misunderstandings with people you do business with. If these problems are not nipped in the bud you may find you need a litigation lawyer which costs a fortune.
A bit of prevention costs almost nothing by comparison. We can provide you with some practical legal advice which includes:
- having a look at your business structure,
- suggesting some simple business practices which will prevent problems, and
- making sure you have proper contracts in place to protect you.
For more information see Risk Management.
Dispute or conflict resolution
If you want to nip a dispute in the bud use a lawyer who is skilled in dispute or conflict resolution techniques, not just litigation. We see litigation as a last resort, and sometimes as a tool in achieving a negotiated outcome. This is far more effective and far, far cheaper than going to court. See Litigation
Negotiation
Our negotiation expertise comes in very handy in lots of areas, not just dispute or conflict resolution. In fact, it can help enhance your assets, not just protect them (see Negotiation).