Asset Protection
"It’s easier to lose money than to make it"
Much like succession planning, asset protection is a key area of focus for family businesses. How the wealth of the family business is generated is equally important as how that wealth will be preserved for future generations. The purpose of building a family business legacy is not to have those assets, borne of effort and dedication, dissipated by the current or future generations.
Anecdotes of family businesses that have amassed fortunes, then lost it all, abound globally. Potential threats include:
- Litigation
- Divorce
- No estate plan or an ill-advised or ad-hoc one
- Unprepared heirs
- Unconscious ownership
- Lack of a workable governance structure
- Shareholder and/or family disputes
- Bankruptcy or Insolvency
To guard against these risks, asset protection strategies are put in place. These include:
- Trusts
- Separating personal assets from business assets
- Implementing robust governance and succession plans
- Use of legal agreements such as shareholders’ agreements, buy-sell agreements and nuptial agreements
- Preparing the next generation of owners and leaders to manage wealth
- Use of communication and conflict resolution strategies to untangle disputes, rebuild trust and clear up ambiguities
- Engaging professional support and advice
