Could You Lose Your Assets? Find out!

Assets, defined as, ‘an item of property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies’ can be hard to accumulate these days. Yet, once accumulated, do you take the next step to protect them?

Irrespective of what form your assets take, Property (Intellect or Physical, Equipment, Businesses, Cash etc), without appropriate protection, they could be lost quickly and with little warning, should you suddenly have to deal with litigation, court action against you, or business debt. The Self-employed are most vulnerable often having ownership of a range of assets, and at times with little distinction between what is business and personal.

Significant wealth is not necessary for Asset Protection, particularly for those in professions where they are arguably at high risk of litigation, such as Consultants, Accountants, Financial Advisers, Doctor’s and Life Coaches. Therefore it is critical that you ensure that whatever assets you have are clearly defined and adequately protected.

There are 3 main ways to protect your asset base.

Insurance – most professions now require indemnity insurance, and you may even have a policy in place, but ensure that it is comprehensive and offers the level of protection that you need. Ask questions, don’t just accept what you are given, as basic cover is rarely sufficient for covering the full range of claims that you be open to.

Limiting your liability – this can be effective, but it’s not full proof. In theory if you protect assets using a limited liability company to trade from, your personal and business assets will be separate. However in cases where fraudulent activities are suspected and/or wrongful trading, courts can illuminate the protection of limited liability and seek the personal assets of Director/s and Shareholder/s.

Wealth segregation – segregating or separating wealth from your estate is a method for putting it outside of the reach of any creditors. However again it is not impenetrable. Yet there are a number of methods of doing this legally, but it is worth noting that you will still need to declare assets on your Self-Assessment depending on how you segregate them.

To identify your assets and the most effective way to protect them, I recommend speaking with an Independent Financial Adviser.

Inspired by Lee Hadnum.

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