We’re still immersed in the coronavirus crisis and while the markets seem to be returning to past peaks, we still have no idea of what will come down the line next. For business owners, it’s time to prepare, and the only way to properly do that is with asset protection.
There may come a time when lawsuits are filed against businesses by individuals who contract coronavirus at their establishments. What can business owners do to protect themselves and their families from these kinds of lawsuits?
Here are some possible actions to consider:
First of all, it is important to make sure that a business is organized in a way that is shields against personal lawsuits. Limited liability companies may (or may not) provide protection against the risk of losing personal assets to a judgement. Corporations are separate legal entities, and can therefore provide protection. A sole proprietorship will not.
It is also important to communicate with you insurance company and make sure that you have COVID-19 protection, and that the protection you have will cover any issue that comes your way. You need to make sure that you understand exactly what you’re covered for and what you aren’t.
Furthermore, consider moving IRA assets to your business’s qualified plan, if the plan will accept transfers from IRAs and if the plan has ERISA protections. Retirement Plans covered by the Federal ERISA statute provide more protection against bankruptcy and creditor claims than individual retirement accounts.
Next, it might be a good time to start thinking about transferring non-retirement assets to your spouse as they have a lower level of risk in not being one of the business owners.
The most important thing is to act now, before anything might happen. You don’t want to be caught waiting and hoping that everything turns out right. Be prepared.