In my last article about asset protection, I told you to put the family home in the non-business person’s name, so the fall guy has nothing in their name. Remember, the family court overrides everything. So, there’s no need to get wobbly when you’re talking about whose name the family home should be in.
Below, I will give you a second strategy for asset protection in business. This one is really simple.
Most of our clients start up in a trading trust, with a trustee company. These trusts are fantastic for small business. The trustee company, which has the power to run that trust in business, needs a director. That trustee company also gives the business asset protection. However, a big mistake that I regularly see is clients having both personal partners as directors of that trustee company.
It’s wrong, wrong, wrong!
By now, you should have set up the fall guy to take all that risk in business. You should’ve put that family home into the non-business person’s name.
The next step is to ensure that the director of the trustee company is the fall guy.
Here’s the deal: You need to be careful. We encourage all of our clients to do the right things, but small business owners are still always at risk of getting into trouble. You need to cover off all five areas of small business, but you’ve only got a limited amount of time. Also, legislation in all areas of small business is getting more stringent and beefed up. The lawyers are after you.
So, my tip is that the fall guy has to be the director. Therefore, if something bad happens in the business and the director cops it, what does that director have in their name? Nothing. The lawyers can’t take anything!
Make sure there is only one director of the trustee company, and that one person is the fall guy.
Having two family directors is a mistake that I see far too often. Get it right.