I keep hearing people talking about asset protection, and that in any serious business venture you're bound to get sued. Due to limited resources, people are bound to delay their protection strategies until it is too late. My question is, at what point should someone start investing some of their resources towards protection?
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personal assets or business assets?– VitalikJan 6, 2011 at 16:02
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2@Vitalik Let's assume he's referring to personal assets (perhaps those of a business owner), so it's an on-topic question.– Chris W. ReaJan 6, 2011 at 18:55
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An easy way to get some measure of protection is to create an LLC.– IsaacJan 7, 2011 at 16:34
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@Isaac Only if you are doing business, and even then, the protection an LLC provides is somewhat overrated (unless you are really careful with your bookkeeping).– Eric PetroeljeJan 7, 2011 at 16:34
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1 Answer
If your meaning of "asset protection" is buying gold and canned food in the name of a Nevada LLC because some radio guy said so, bad idea. For a person, if you have assets, buy appropriate liability limits with your homeowner/renter insurance policy or purchase an "umbrella" liability policy.
This type of insurance is cheap.
If you don't have assets, it may not be worth the cost of insuring yourself beyond the default limits on your renter's or homeowner's policy.
If you have a business, you need to talk to your insurance agent about what coverage is appropriate for the business as a whole vs. you personally. You also need to talk to your attorney about how to conduct yourself so that your business interests are separated from your personal interests.
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+1 for umbrella liability policy. Unless you have a net worth in the millions, that should be enough. Jan 6, 2011 at 21:25