Entrepreneurs, businesses and individuals should constantly plan on the worse case, even when times are good. This is the first step to asset protection whether you have something to protect now or have in the future. Free market economies are such that there will some bubble every 7 to 10 years. These fall in line with 7 year cycles of ups and downs in all aspects of life. The easiest way to get through the down cycles is to plan during the good cycles, at the end of tough times and at the beginning of the good cycles. While some do not believe that we are at the beginning of a good cycle or simply coming to the end of a bad cycle, now is the time to make proper planning.
What are the 5 secrets you need to know? You need to maintain your documents, use the law, incorporate an estate plan, keep good financial records and know who to trust.
Proper planning starts with keeping copies of all signed documents, along with keeping copies of every document that have to do with any financial guarantee whether it is through the company or personal guarantee. It is amazing the type of guarantees that surface during the sale of a business. Many do not realize there are personal guarantees or corporate liabilities that were unknown. Keeping these documents for a 10 year period is the best practice. Some documents should be kept permanently which would include real estate type documents and business sales. The documents should be kept organized and catalogued with a periodic review. Review of all documents should be done annually with your attorney. Understanding all potential liability whether it may come to fruition or not is extremely important in asset protection and financial planning.
Proper tools need to be put in place so that the ship will stay afloat regardless of what storms arise. Build your ship for smooth sailing, but keep it unsinkable during the worst of storms. In other words, do not build the Titantic, build a Zumalt-class destroyer. The Titantic was a big fancy ship of its day that was thought to be unsinkable just because someone said, but turned out to be nothing but a floating disaster. A Zumalt-class destroyer should be used metaphorically as it is designed to come in, appearing to be the size of a small fishing boat on radar, but survive the worst of storms and bring in more lethal fire power than has ever floated on the high seas. Planning should not only be handled correctly, but it should be done well and be done to last.
The bottom line with asset protection is to spend the time now to make plans regardless of your situation and it will save you ten-fold of time in the future, along with unnecessary worry and expense. Every bad business cycle that we have seen in our practice of law there have been numerous situations where we knew if we were involved years before, the problems would have never occurred or would have different outcome. This is not always the case in litigation as it is quite often unavoidable, but proper planning can sure save not only your estate, your well-being, but your personal sanity.
Stephen Fuller is the managing partner of Fuller Sloan LLC and has practiced in business litigation and consulting for 37 years and has over 25 years representation of the founder of one of the largest sit-down casual restaurants in America. For more information, send Mr. Fuller an email.