Corporate Governance

The VIDEO is a webinar on the topic of corporate governance–how to properly run your business AFTER the paperwork is completed. Liability protection does not come from just doing the documents! You must run the company in compliance with those documents and the law. Good corporate governance is what REALLY protection your.

  • Get our Corporate Governance Guidebook Here!

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Business Protection & Paperwork

In our section on liability, you learned that there are two basic types of liability: Personal and Professional.

Personal liability is that which comes from you as an individual, such as causing a car accident. This liability puts your personal assets at risk and can even spill down to attach your business assets as well.

Professional liability is that which comes from your work as a professional business person, such as managing property. This liability puts your business at risk and can even reach up to attach your personal assets as well.

A solid and proper business entity provides a shield between your personal and business assets, protecting your business assets from personal liability, and protect your personal assets from your professional liability!

The key is to form the correct entity, and then maintain it throughout the life of the asset. How do you do that? Well… Here are some of the issues that you need to be aware of:

  1. Proper Entity: Sole Proprietorship, Corporation, Limitied Liability Company, Partnership, Trust. Each has its own benefits and drawbacks. And they do NOT all provide the same protection!
  1. Proper Organization: Management (member or manager), Membership (single v. multiple owners), Tax Elections (partnership, S-status, corporation), Holding companies. How you set up and organize your business entity or entities have legal ramifications.
  1. Proper Documentation: Articles of Organization, Operating Agreements, Loan Documents, Minutes, Authorizations. Filing the online papers with the state does not provide protection. You are setting up a legally-recognized entity and there are obligations that come with that.
  1. Proper Funding: Contract novations& assignments, Deed transfers. Most business owners forget this step. Unless you actually transfer ownership of the asset to the company, it’s not protected. That transfer takes a written agreement.
  1. Proper Maintenance: Meetings, Book Keeping & Accounting, Contracts, Employees, Taxes. This is also a reason why people lose their liability protection. If you co-mingle funds, improperly take loans, fail to have meetings or take minutes, don’t pay quarterly taxes and etc, you could lose the protection you initially sought.

We know all this seems overwhelming. But please, don’t worry! Millions of entrepreneurs successfully set up and maintain their businesses. All you need is a bit of assistance!

Breglio Law Office is here to help. Large businesses have a host of lawyers and consultants to make sure they are run as efficiently and legally as possible. Now, even small entrepreneurs can have access to the same help! Breglio Law Office offers very affordable consulting services to help you navigate the legal waters and protect your assets! Even you can afford your own corporate counsel.

THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT AN ATTORNEY.

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Basic Liability

There are two basic forms of liability that arise for most people. A Personal Liabilityand a Professional Liability. We’ll discuss those below. But first, when we talk about legal liability in the context of the services we provide, we’re talking about an obligation that is imposed on someone due to statutory, contractual or judicial mandate and it arises out of some action or inaction on your part. The obligation is almost always a monetary payment for some kind of damage you caused. When you can’t make the monetary payment, the other party can get a court order to attach (or go after) assets you own. Therefore, part of our service is to help you protect those assets.

Personal Liability: This kind of liability comes from your daily actions as an individual. This might mean driving car, skiing or even invited people over to your house. We usually think of this kind of liability as that caused by an accident. If you drive your car and are found responsible for an accident, you are liable for the damages to the other party. The same is true if you are skiing and run into someone.

With the car example, you probably have insurance liability coverage in some amount. But if the damages exceed the insured amount, you are then “personally” liable for the remainder. In this case, a court can attach ANY asset you own, including savings accounts, jewelry, stocks, cars, homes and even business interests. Retirement accounts and, in some cases, your personal residence is exempt.

There are a few ways to protect yourself from this kind of liability. The first is additional insurance coverage called an “umbrella” policy which will kick in and cover the damages. You can also use a trust, but these can be pierced if a court determines that it’s just a way to avoid liability. An irrevocable trust is pretty much impenetrable, but comes with drawbacks. The best thing to do is consult with an attorney to determine about what types of assets you are protecting and plan a method that is best for you.

Professional Liability: This kind of liability comes for what you do in your business. It doesn’t matter whether you paint houses, invest in real estate or make movies. You run liability anytime you engage in business with others. It might mean liability on a contractual debt, a tenant’s accident in a rental property, or an injury caused by a product you sold. Once this liability occurs, you are responsible to pay for the damages and the injury party has to decide whom to sue to recover. If the injury was caused in the due course of your business, they will have to sue the business entity you established.

You established a business entity to protect your “personal” assets from the liability you incur in your business. If you have the property entity with all the legal documents and have maintained it appropriately, then the liability will stop at the corporate level. The judgement can’t attach your personal assets. Any asset your business owns is subject to judgement, but oftentimes that is nothing and your business simply files for bankruptcy, sparing your personal assets.

The plaintiff (the injured party that is suing you) will try and “pierce the corporate veil.” That is, try to convince the court that your business is really an “alter ego” of you (indistinguishable from your person) and therefore it is really “you” that is liable. That way, they can go after your personal assets. So, how do you keep the plaintiff from breaking through your corporate liability protection?

Easy! Set up the right kind of entity, have all the legal documents, run the business according to those documents, don’t commingle funds, hold your meetings and comply with all laws. What you want to do is build a strong case that you are a legitimate business. The more evidence the better. One of the best pieces of evidence is having a corporate attorney as part of your business and in attendance at your meetings.

At Breglio Law Office, we do more than just provide the legal documents, we help you understand how to run your company and can act as your corporate counsel. We can even attend your meetings. We provide the SERVICE that helps you protect your business.

THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT AN ATTORNEY.

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Asset Protection Basics

These VIDEOS are a great place to start learning about where liability comes from and how to protect yourself. There are two types of liability: Personal and Business. And as such, you need to protect yourself differently based on the type of liability. Understanding liability is key to understanding how best to create and understand protection strategies.

Protect What You’ve Earned!

Asset Protection

The main focus of Breglio Law Office is our Asset Protection strategies. Protecting your assets is a movie, not a photograph. It is something that must adapt and change over time and according to your particular situation. Thus, it is something you need to continually evaluate and modify. It is not something you “do” and then forget about.

Further, there is no one way to protect your assets. There are many opinions and packages, and some are better than others!

Breglio Law Office is committed to making you successful in your professional endeavors, and therefore takes an individualized approach to helping our clients protect their assets. We always recommend whatever works best for you, your current asset situation, your goals for acquiring new assets, your risk aversion, your unique abilities, as well as your stage in life. This personal approach might take more discussion up front, but provides far better long-term results.

When thinking about protecting assets, you need to ask yourself a few questions:

  1. What am I protecting?There are many types of assets, from bank accounts, to stocks, to jewelry & family heirlooms, to business ownership, to rights to income streams, to real property and so forth. Some things fall in the category of business assets and others are personal assets. The way you protect an asset depends on what you are trying to protect.
  1. Who am I trying to protect it from?You might be worried about creditors if you have large outstanding debts, or you might be worried about lawsuits from tenants in a rental property. Maybe you’re worried about an ex-spouse. Liability comes in different forms depending on where it’s coming from.
  1. Where is the asset located?You could be holding large amounts in cash in your mattress, a bank or even an off-shore account. Or perhaps it’s a rental property located in a different state from where you live. Maybe you have assets sprinkled all over the place.
  1. When are you trying to protect it?This isn’t an obvious question one might ask, but it is important. So, are you trying to protect your assets from a future threat, or are you currently being pursued? The ramifications of the answer need to be discussed with an attorney.
  1. Why are you trying to protect the asset?It’s important to know your goals in seeking asset protection. Protecting an asset until such time you want to enjoy it, or sell or transfer it in the due course of business is very different than protecting the asset in order to leave it to your children.
  1. How do you want to protect it?This is the final question. It takes into account your risk aversion, the value of the asset, what liability you run (personal or professional or both) and what steps will make YOU comfortable.

As you see, there is no silver bullet, no one way. That’s why we don’t give you an answer here. There are too many variables in addition to your personality. Please feel free to contact us and we’ll be happy to discuss your situation and goals before we make a recommendation.

Protect What You’ve Earned!

THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT AN ATTORNEY.