Entrepreneurial Wealth and Asset Protection
Best Practices Regarding Asset Protection
Having that entrepreneurial spirit means taking risks, but it also opens you up to immense opportunities that extend beyond the merely financial. As entrepreneurs, women face more considerable roadblocks, which makes adhering to the following best practices paramount:
- Keep your personal assets separate and protected from your business dealings by establishing a corporation or another form of limited liability enterprise.
- Keep separate businesses separate. Taking the time to structure each business as a separate entity builds in protections.
- Purchase business and personal insurance that is sufficient for the job at hand and that evolves along with your personal and business insurance needs.
- Avoid personal guarantees with vendors. Even negotiating higher terms is often preferable to opening your personal finances up to greater vulnerability (entrepreneurship is all about balancing risk against the generation of revenue, and personal financial vulnerability is rarely worth the risk).
- Consider transferring some of your assets to a trust that allows a third party (your trustee) to manage assets that benefit an assigned beneficiary. This can be an important tool for avoiding liability and legal obligations.
This may seem like a lot, and it is complicated. Working closely with an experienced estate planning attorney at Ibekwe Law, PLLC from the outset can help ensure that you begin as you mean to go on and that your assets are well protected all along your entrepreneurial journey and beyond.
Special Considerations for Married Women
Married women have special concerns when it comes to entrepreneurial wealth and asset protection. Because divorce happens and because couples are almost as likely to divorce as they are to stay together, female entrepreneurs must tread lightly. Every divorce is difficult and complicated, and divorces involving businesses and high assets are that much more so. If you happen to be an entrepreneur who owns more than one business, you have your work cut out for you.
If you brought your business into your marriage with you –and kept it separate throughout– it remains your separate property that will not be divided upon divorce. The fact is, however, that it is very common for business and family finances to intermingle over the course of a marriage. A prime example is when you invest marital funds in your business. Further, even if you have managed to keep your business utterly separate from your marital financials, any increase in the value of your business since your marriage will likely be considered marital property– to be divided equitably between the two of you in the event of divorce.
As women, we tend to do it all, and this is even more true of mothers. Not only are you an entrepreneur, but you are also more likely to take on primary responsibility for raising your children. If you are facing a divorce, this can play another significant role. Texas courts are motivated by the best interests of the involved children in matters related to child custody, and this often means preserving the status quo.
While this can be to your advantage regarding your parenting plan, it can actually work against your entrepreneurial endeavors. If the court determines that you will remain the primary custodial parent, it can sway how it divides your marital assets (especially if your business is considered a marital asset). In a worst-case scenario, if the court determines your soon-to-be ex-spouse is better positioned to continue running your business, it could even award said business (or a significant portion of it) to your divorcing spouse (leaving you with the equivalent in other assets). In other words, it is exceedingly complicated, and you should consider contacting an estate planning attorney either during or immediately after the divorce process.
Protecting Your Wealth
As a married woman, there are important factors you should carefully consider regarding your entrepreneurial wealth and asset protection, including the following:
- Consider carefully if you want to borrow from your family’s coffers to finance your business. The less you mix and mingle funds, the more likely you will be able to maintain your business’s status of separate property.
- Pay yourself a fair salary. If you throw yourself into growing your business but fail to adequately pay yourself, it can be interpreted as a drain on your family’s finances and can increase the likelihood that your business will be considered marital property. The idea behind this is that while your spouse supported your family, you worked to build your business.
- The more involved your spouse is in your business –and the longer the involvement– the more likely the court is to determine that your spouse should profit from your business’s growth.
- Remember that, upon divorce, the court will divide your marital assets in a manner deemed fair given the circumstances. Your goal is to keep your business wholly your one, which means you should be open to sacrificing other assets in order to reach an agreement. In other words, it is better to give up other assets, such as equity in your home or a percentage of your financial portfolio, than to submit to the division of your business, which can spell the beginning of the end.
Address Your Entrepreneurial Wealth and Asset Protection With A Savvy Texas Estate Planning Attorney Today
Your entrepreneurial wealth is worth protecting, but as a woman, you face unique obstacles. The dedicated Texas estate planning attorneys at Ibekwe Law, PLLC are in the business of empowering female entrepreneurs and of helping you protect your assets as you build your unique empire. To learn more about how our resourceful legal team can help you, please do not wait to contact or call us at 512-505-2753 today.