Engage in Asset Protection Planning
The civil litigation system itself represents a significant risk factor and exposure to liability. Therefore, it is important that small business owners employ the various strategies that allow them to control the risk factors in litigation.
Of course, small business owners should adopt a comprehensive asset protection plan, based on the strategies advocated in this section of the small business guide (e.g., exemption planning, asset projection trusts, strategic structuring and funding of the business entities, avoiding exceptions to limited liability, etc.).
These strategies are designed to place both personal and business assets outside of the reach of creditors, and to reduce the possibility that claims against the business owner, in his personal capacity or against his business entity, will be made or will be successful.
In short, a comprehensive asset procession plan can help ensure that if monetary damages are awarded, your assets will not be reachable by the plaintiff--making you judgment-proof.
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