What happens to your business if you are hurt? Know What Can Happen to Your Business If You Become Incapacitated or Pass Away

What happens to your business if you are hurt?

What happens to your business if you are hurt?  Preparing your company for your incapacity or death is vital to the survival of the enterprise. Otherwise, your business will be disrupted, harming your customers, employees, vendors, and ultimately, your family. For this reason, proactive financial planning — including your business and your estate plan — is key. Below are some tips on how to protect your company and keep the business on track and operating day-to-day in your absence.

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Organizing for Tax (and Estate Planning) Season

 

It’s the start of a new year, which means tax season—and this year’s April 17th IRS filing deadline—is just around the corner. Soon you’ll be receiving tax forms such as your W-2 or 1099s, and you’ll start thinking about the life events that could affect your taxes in various ways.

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What is a Spendthrift Trust? It Can Be a Great Solution for Your Heirs

What is a Spendthrift Trust?

There are many tools that can be used when putting together your estate plan. These tools can also provide asset protection while you are alive.One such tool is a trust.

A trust is a fiduciary arrangement, established by a grantor or trustmaker, which gives a third party (known as a trustee) the authority to manage assets on behalf of one or more persons (known as a beneficiaries).  Since every situation is different, there are different types of trusts to ensure the best outcome for each beneficiary. One type of trust, known as a spendthrift trust, is commonly used to protect a beneficiary’s interest from creditors, a soon-to-be ex-spouse, or his or her own poor management of money. Generally, these trusts are created for the benefit of individuals who are not good with money, might easily fall into debt, may be easily defrauded or deceived, or have an addiction that may result in squandering of funds.

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The Truth About Personal Risk Management, Part 1: Insurance

Personal risk management is being aware of the risks in your home and in your life, and then planning how to handle those risks. Insurance plays a big part in managing risk. Most people don’t like paying insurance premiums, but when something happens and the insurance pays for a covered expense, they are relieved they had it.

The Key Takeaways

o Not recognizing and managing risk can set your family up for financial ruin.

o Recognizing and managing risk will give you and your family the freedom to live life, without worrying about how you would handle a catastrophic loss.

What kinds of risks should I be aware of?

Property and casualty risks include your car and other vehicles, home and furnishings, jewelry, cameras, and so forth. You would want to protect these from accidents, theft, fire, flood, and earthquake damage. Health and long-term care insurance help protect your finances if you become ill or injured. Disability income and life insurance help replace income in the event of a long-term illness or death. If you volunteer with children or youth, you may need personal liability insurance. An increase to your umbrella policy is warranted once you have teenage drivers. If you are a business owner, you may need insurance as part of a buy-sell agreement with a key employee or business partner in addition to business liability insurance. If you are in a high-risk profession (like health care, construction or real estate), you will probably need additional asset protection planning.

How much insurance do I need?

You need enough insurance to protect your assets in the worst-case scenario. At the same time, the premiums should be an amount you can comfortably afford in your budget. Decide what you need to insure, how much to insure it for, and how much you are able and willing to pay in deductibles and premiums.

What You Need to Know

Your family’s needs for insurance will change over time and will reflect your values at each stage in life. For example, you may need more life insurance when your children are young; you may want long-term care insurance as you near retirement (although it is less expensive when you are younger); you may not need as much personal liability insurance if you retire from volunteering or once your children become independent; and you may not need business insurance if you sell your business.

Actions to Consider
o Look at ways you can reduce premiums. For example, installing a home security alarm system or trimming shrubbery may save on your homeowner’s insurance. If you drive an older car, you may not need collision insurance. If you can handle higher deductibles, your premiums will likely be lower.
o Look for ways to reduce risk entirely. For example, you may want to sell a property that is high risk or even retire from a high-risk profession.
o Some risk may be perfectly acceptable to you. Consider what you might lose if the worst happens and see if you could live with the loss. This is called risk budgeting.
o Keep good records on personal property. Review the values and your insurance coverage annually. Values fluctuate, and you don’t want to over- or under-insure.
o Determine what you would lose if someone sued you with a liability claim. You worked hard to build your net worth and you do not want to lose wealth if someone files a claim against you. Even if it is a frivolous claim, you may have to spend a small fortune to defend yourself. Take action to protect your assets for yourself and your family.
o Health care and long-term care costs are increasing at an alarming pace, people are living longer, and many older Americans have seen their retirement savings decline in recent down markets. A professional can help you evaluate your health care risks and determine how to plan for them.

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Don’t Abuse Your LLC If You Want To Protect Your Assets

Veil piercing is a concept that has existed in the law of corporations since long before integrated estate planning came about. Asset protection at its heart has two principles in play: it should protect you from your business and your business from you. These concepts are all about separation. Separating you and your assets so that they are distinct persons. It is the way in which we are related to our assets that allows a creditor to invade our assets for a debt to the business. The same is also true when our debt allows a creditor to invade our business. Abusing your LLC can forfeit this protection.

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What not to do when you are sued

What not to do when you are sued

You always hoped that this was never happen. Unfortunately, the day has come. Someone has either threatened to sue you, you are hopelessly behind on a bill, or you have been served with a lawsuit. No doctor wants to be in this position, but about half of doctors are in any given year. If you have an Integrated Estate Plan, it is time to put it into action and trust that you have done all that you can. What not to do when you are sued is very important.

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Is insurance enough to protect your assets?

Is insurance enough to protect your assets?

 

Business owners and the affluent should know a few things about their insurance. The first line of defense in any asset protection plan is the purchase of quality insurance policies. There is a lot more to it than just purchasing malpractice insurance. These and many other policies tend to have a lot of exceptions. There are also more threats to your wealth than just those springing from the practice of your profession. You should also protect yourself. Is insurance enough to protect your assets? Let’s examine some of the insurance issues in your personal life before we get into malpractice insurance itself.

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Doctors have to worry about the malpractice of their partners.

 

 

Doctors have a lot to worry about.  They constantly worry about their patients.  Their work is important and often it is a truly life or death situation.  Mistakes happen and this could results in a malpractice lawsuit.  Most doctors are professional, reliable, and consistent.  They handle the pressure and provide excellent care to their patients.

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