Asset protection is about preserving the wealth of the entrepreneur in the event of a business failure or something going awry. Asset protection, structured and implemented properly, is legal and ethical. Considered broadly, asset protection encompasses everything from incorporation, to insurance and to the implementation of policies and procedures to mitigate risk. Considered narrowly, asset protection considers how a business is financed, and assets removed tax efficiently, so that in the event of failure, the accumulated wealth of the entrepreneur is not lost along with the business.
A simple example of asset protection is the situation where an operating company is profitable but undergoes extremes of cash requirements, being flush as certain times but requiring cash at others. An asset protection strategy may include the incorporation of holding company into which monies are paid out through a tax free dividend when the operating company is flush, and then loaned back on a secured basis when cash is required. The holding company, as a secured lender, has a priority claim over unsecured creditors against the assets of the operating company in the event of failure. The entrepreneur’s wealth is preserved.
Asset protection strategies require careful consideration of the business requirements and the legal framework relating to fraudulent preferences and oppression, among others. Our Ottawa business lawyers have helped guide businesses and entrepreneurs in Ottawa and Ontario through the legal and technical requirements to successfully plan and implement asset protection strategies to preserve wealth.
Talk to us about how to position your business for asset protection and wealth preservation.
Topics: business law, Ottawa business lawyer, Kanata Business lawyer, asset protection, wealth preservation