Managers and company owners fear a few items more than litigation.  Legal actions against a corporation can potentially damage an otherwise sterling reputation, create disputes, and of course result in the loss of large sums of money and staff talent.  It has been said and could be argued that we live in a litigious society.  Fortunately, with every new legal issue that can arise, there are just as many ways savvy business owners can protect their company, assets, and interests.  Ideally even the most negative situation can be spun into a win-win situation where owners, staff, and customers are given a positive outcome when a potential violation or lawsuit could arise.

Avoiding the Courts and Protecting Yourself

Did you know that corporations pay out more than 20 billion dollars a year to litigation attorneys?  This alarming figure does not account for lost money due to settlements, or perhaps more importantly lost business-related relationships that were once mutually beneficial.  There are countless potential risks and legal issues that can arise.  We want to highlight some common situations and potential strategies that can be implemented to avoid the court system should a misunderstanding or disagreement come forth.

Disputes between Partners

Every company starts out a little differently.  Some begin as a simple sole proprietorship, other times successful business owners combine their resources and make a corporation.  Regardless of how a company starts, it is important to make necessary changes along the way you grow, add new resources, and bring on new employees.  One of the most efficient ways for partners to reconcile differences is to draft a partnership agreement that outlines certain protocols.  Primarily a dispute resolution clause is guidelines that can be agreed to beforehand to help avoid courts and possible legal ramifications.

Keep Terms in Writing

Contracts are essential for any business to outlines terms between employees, contractors, vendors, and customers.  It is a sound investment to have any contract drafted, reviewed, and altered by a business consultation law firm.  This will help ensure that terms are properly outlined, risks are assessed and most importantly, the contract is legally binding in your jurisdiction.  Valid contracts can act as an important reference point, clarify misunderstandings, and provide legal protection should a disagreement arise.

Take Action Before Things Escalate

As a general rule of thumb, ignoring an issue won’t make it go away, and it could lead to the issue becoming worse.  By taking swift action you can help alleviate negativities and prevent issues before they get out of hand.  As time goes on people tend to become entrenched in certain ways of thinking and small issues can grow into bitter situations.  Ensure that management and staff members are trained to see potential risks as they arise and know what company policies should take place to alleviate the issue.  It is a good idea to make certain that employees understand what actions to take and feel comfortable bringing an issue, glitch, or mistake up to management so it can be dealt with.  Please consult with a business-risk assessment attorney to learn more about how you can protect your company and assets.

Protecting your assets is best handled in preparation for circumstances, not as a quick response to them. It is important to remember that these steps should be taken before any legal action, such as a lawsuit, has been filed.  Below are several common ways that your personal or primary home can be protected should a legal cause ever happen.

Homestead Exemption

Almost every state has statutes that protect a certain amount of value of your home from creditors or during bankruptcy.  Essentially if someone such as a creditor files a lawsuit against a respondent, the resulting case may require the sale of the home.  The creditor will only get the remaining balance after selling fees, the mortgage balance and the homestead exemption amount.  If homeowners want to take advantage of this exemption, they should contact us.

Tenancy by the Entirety

Certain states offer unique protection called “tenancy by the entirety.”  Essentially this protects the home if one spouse is sued for reasons that have nothing to do with the other spouse.  Essentially this law asserts that it is not fair for one spouse to lose their home because of the actions of the other.  Even if your state does not have this law in the books you can accomplish the same result in the other ways described herein.

Create a Domestic Asset Protection Trust

This is a self-settled trust created and protected under certain state statutes.  In general, these types of trusts are becoming more accepted each year as new states adopt some form of DAPT trust laws.  This type of trust can provide certain protections to homes, farms, vacation homes or beach houses that you plan on keeping for life or a very long time.  In most states, the longer a property is held in a DAPT, the more it will be protected in the future.

Speak with a professional today

There are many ways in which your personal and business assets can be protected.  Perhaps you run a business where you must take financial risks.  Putting the house in your low-risk spouse’s name, for example, could help protect your home should legal concerns arise.  You may also consider getting an “Umbrella Risk” insurance policy that protects you from a wide variety of situations.  These Asset Protection techniques should be components in your Asset Protection System™.  Remember that it is wisest to plan for a storm while the skies above are blue.