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Whether you're an individual or you're acting on behalf of a business, taking steps to protect your assets or the assets of your business is a vital step in financial planning. Asset protection ensures that your assets aren't affected by legal issues, particularly those faced by business owners and individuals, such as divorce, lawsuits, credit collections, and bankruptcy.
Keep your assets safe with the help of asset protection planning professionals. Trust the attorneys at Giro & Associates LLC in Hackensack, New Jersey.
From April 2020 to April 2021, Bergen County registered 876 bankruptcies. Although the number of bankruptcies in the area is dropping year after year, that's still a staggering number of businesses and individuals potentially facing severe financial loss. This, along with lawsuits, divorce, and poor investments, are all risks that could result in net worth/overall wealth reductions. Unfortunately, those who deal with these often unanticipated hurdles can destroy a lifetime of savings.
Having the right protections in place is vital for any person or business with considerable wealth, as well as for business owners or anyone with valuable personal assets in their name.
There are a variety of strategies that are useful in protecting your assets from loss. These include exempting your assets from creditor claims, limiting your liability as a business owner, and transferring risk through secure insurance policies.
While some states have laws in place that protect a person's home and primary vehicle in the event of bankruptcy, New Jersey's exemption laws are slightly different.
The state allows you to exempt up to $1,000 of personal property, such as jewelry, electronics, or other possessions, and up to $1,000 of furniture and household goods. Additionally, those facing bankruptcies are allowed to retain their clothing and burial plot, should they own one. In the event of a married couple claiming personal bankruptcy, personal property exemptions are doubled.
That said, some states do allow individuals to choose from either state or federal exemptions during the bankruptcy process. That means if it's preferred, an individual can choose to ignore state exemptions in favor of what's exempted by federal bankruptcy law: their house, car, personal items, retirement accounts, household goods, Social Security benefits, and burial plots.
In New Jersey, it's often advisable to opt for federal exemptions over what's offered by the state. However, a legal professional can provide the best insight when navigating this process.
Entrepreneurs, particularly those who operate as sole proprietors, might find that their personal assets are on the line in the event their business faces a legal issue. This is true whether they operate a large business with a high revenue or a small home-based business.
Unfortunately, any lawsuit filed against a sole proprietorship is then levied upon the owner and can result in extreme personal financial loss.
Thankfully, by converting a business into a limited liability company (LLC) or corporation, business owners can protect their personal assets and the assets of their household members in the event a legal issue arises. When a lawsuit is filed against an LLC or corporation, or bankruptcy filing is required by the business, all personal assets of the owner then become exempt and only the business assets are liquidated.
If you operate a business of any size, liability insurance is a must. If you don't own a policy, invest in one now. If you do own a policy, take time to review it regularly and make sure it contains adequate coverage for the size of your business and volume of your assets, as well as a deductible that works for you.
It's often helpful to work with an asset protection specialist, such as the attorneys at Giro & Associates LLC, to analyze your policy on your behalf, ensuring there aren't loopholes or flaws, and confirming that protection is in place where you need it most.
When purchasing your liability insurance, keep in mind the risks you're most likely to face in your business, the issues you've experienced in the past, and the coverage you have (i.e. the risks you've transferred) within your policy. If the coverage doesn't appear to meet your needs, increase it or shop around for something better.
Work with the attorneys at Giro & Associates LLC to ensure you have the right protections in place for your personal and business assets. Contact us today to schedule a call and learn more about how we can help keep your assets safe.
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