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Asset Protection

What is Asset Protection?

The Basics

Asset protection is the key to making sure you don’t lose everything in a lawsuit. Asset protection is a strategy used to combat a sue-happy society. It’s based on the principle that assets in your name can be seized by a judgement creditor, and assets not held in your name are better protected. In other words, if you lose a lawsuit, assets held by a limited liability company or corporation don’t belong to you personally so they can’t be taken from you. But you must meet the legal requirements, best practices and filing requirements to have those protections in place.

What do I need to protect my assets?

Use a Registered Corporate Entity

Meet Annual Requirements

Act BEFORE you are sued

Maintain Adequate Insurance

Keep Separate Bank Accounts

File Separate Tax Returns

Plan your strategy before you get sued

Once a lawsuit has arrived, it’s too late to put protections in place and there is little you can do. Take action before a claim or liability arises. In fact, a strong asset protection structure can discourage lawsuits because the better protected your assets are, the stronger a deterrent it is. Also, there are some states (such as California) with weak protection laws, that require additional steps to have complete protection. It’s important to understand your state’s laws as well as the states in which you will incorporate and do business.

Always Do Business as a Registered Corporate Entity

First and foremost to protect yourself, use a registered corporate entity. Most people don’t realize there’s a risk in keeping assets and property in your name as a sole proprietor, which also means keeping the liability and the risk. If you’re a sole proprietor and an angry customer sues you, any assets you own such as your house or car are not protected. Nor are financial assets such as your bank account. These can all be taken should a judgment be found against you. A two-man general partnership is twice as risky as now you take on the liability for your partner’s mistakes. Overall, it’s extremely risky to be a sole proprietor.

To succeed in business, to protect your assets and to limit your liability, you want to do business as a Corporation, Limited Liability Company (LLC), or Limited Partnership (LP) which are treated under the law as truly separate legal beings. In this way, if you get sued your personal possessions will be protected.



As you perform your research on how to best accomplish the tasks necessary for sound asset protection, you need to know that there are a number of corporate information scams in the marketplace.

A popular one is the $99 incorporation. We have tested such services to see how they could possibly do all the work necessary to completely and properly form and document a corporation or LLC for just $99. These providers fall into two camps:

Take the Money and Run

The first camp does the minimal work needed to form an entity. They file the articles. That’s it. Once you pay the $99 they will no longer take your phone calls or questions. Eventually you will be sent a document with a state seal on it indicating that you are incorporated, but you will not be sent the minutes, the bylaws, operating agreements, or any issued stock – all of the other components necessary to be a complete corporation.

The Bait and Switchers

The second camp uses the $99 as a come-on. They offer an a la carte menu in which the $99 is just for the filing of the articles. The bylaws or operating agreements are another $350. The meeting minutes are $250, and so on. By the time you are done they have gained your confidence and that $99 has ballooned up to $2,000 to $3,000 for just one entity.


Corporate Direct is Different!

We have one simple fee which includes everything you need in one simple package as well as ongoing support as long as you maintain registered agent service with us.

We offer optional services as well but our initial formation fee covers all of your corporate formalities. 

As well, at Corporate Direct you will be assigned a dedicated Incorporating Specialist. Our Incorporating Specialists are extremely knowledgeable and can help guide you as your businesses grow and you begin adding more entities, or working in additional states. 

Incorporating Specialists cannot give legal advice, but should you need it, we’ve got you covered there too! Unlike many other companies, we have an attorney in the building. Rich Dad Advisor Garrett Sutton of Sutton Law Center is available for legal consultation for a reasonable fee. (Garrett Sutton is the founder and President of both Corporate Direct, Inc. and Sutton Law Center, PC).

Keep Your Personal and Business Assets Separate

If you don’t insulate your own assets from those of your business, you could be in trouble. If you operate your business in the form of a sole proprietorship or as a general partnership, these businesses are not registered entities, which means that your personal assets are not insulated from those of your business. Not having separate bank accounts is also problematic.


Insurance will be your first line of defense and a comprehensive commercial insurance policy can help you keep the property instead of having it end up as a part of a court-ordered settlement.

But as we know, insurance companies have an economic incentive not to cover every claim. They find reasons to deny coverage. So while you will have insurance, you will use entities as a second line of defense to protect your personal assets from your business claims. Look for the following as you consider insurance: 

  • The liability insurance should cover injuries to third parties on your property.
  • It should cover trespassing, especially if you have undeveloped or vacant land.
  • If you have people working on your property as your employees, you should also have Worker’s Compensation insurance.
  • The insurance should also have “increased cost of construction” additions if your building should become damaged or require reconstruction. That means you’ll be covered at today’s construction prices instead of those of previous years.
  • If you are a landlord, “loss of rents” riders can help you recover costs in the event your building is damaged and uninhabitable so that you can pay relocation costs or receive income from the property while it’s being rebuilt to offset right losses.
  • A final consideration is a “higher limits” rider, so that you have extra protection in the event a catastrophic claim is filed in one of these categories.