As businesses recover from the recent recession, many business owners want to be sure that their business is protected from any future bumps in the economic road. As an article in Forbes explains, asset protection planning is a necessary topic that should be approached with caution and care. First, it is important to note that asset protection strategies need to happen before any potential liability arises. Asset protection is not a curative maneuver. If you do not employ asset protections strategies until after a claim has arisen against you, not only will the asset protection fail, but also you may face penalties for fraudulent conveyance. The best time to plan, therefore, is when you don’t anticipate facing any liability. When selecting the strategies best for you, remember that asset protection planning is a matter for the states. This is because most strategies are based on state, rather than federal rules. Moreover, the variation of laws from state to state is often huge. Whereas some states are “creditor friendly,” others afford certain assets substantial protection from creditors. Finally, it is important to remember that asset protection is often difficult. There are many tactics that may work in tandem with one another to provide an effective defense against creditors. These tactics may include forming an LLC, changing the state where the business is registered, or placing the ownership of the business in trust. For more information on asset protection for business owners, or for any other estate planning questions, please contact us at 818.956.9200.