As part of an asset protection plan, good financial records should be kept. 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.
Along with keeping track of all of your documents, keeping track of your financials is extremely important. It is amazing what we have seen the last few years where assets disappeared off financial statements then suddenly creditors come in questioning where these assets went or even did they exist in the first place. This can cause not only legal problems with fraudulent conveyances and transfers, but potential criminal problems because the question arises were the assets in existence. These types of problems can toll any statute of limitations meaning that the liability clock does not run out. Any financial statement that you provide, including income tax returns and financial records provided to third parties, should be maintained and organized and kept for a minimum of 7 years. We prefer the 10 year rule and it does not matter if they are kept in hard copy form or scanned, but they should be easily accessed and tracked. Review of these financials should be a part of your yearly audit.
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 and 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.