Asset protection offer and questionsgreenspun.com : LUSENET : Countryside : One Thread
Had an aquaintance drop by my work place and we got to discussing what he does (I knew he "sold" something, but was unsure of what). Turns out he's an asset management consultant (fancy talk for "let me tell you how to cover your behind"). He basically sells what are known as Nevada corporations, which is where you literally incorporate your business, just like most folks eventually do, but you do it legally in the state of Nevada, no matter where you live. More a matter of paper filing than anything else.
The benefits to a Nevada corp are that it is the one state in the union where the corporations formed therein are anonymous - ie your name isn't listed anywhere. This prevents lawsuits from "piercing" your corp. and the claiments coming after your private stuff after they suck the life out of any assets held by the corporation. Supposedly, regular corps were designed to do this, but in reality, it doesn't work like that. He told me that in my state, NC, corp piercing was almost routine. Somehow, you can also do this with your home equity, too, although I'm not sure how that works. That way a frivolous lawsuit doesn't drain everything you worked for out from under you.
Here's the point of the post. One - I know that this is not only legal, but that it actually provides the state of Nevada with one of it's few "imports", as they have little in situ resources aside from gambling. But I don't know diddly about the inner workings of these things - is he being straight with me about the benefits, of what?
Two - if he is as straight as a salesman is likely to be, then if any of you out there want to have him go over the details with you (he has exclusive territory over NC and SC, but can be "invited" anywhere in the country) to see if it might be a good financial move for your business, than you can e-mail me privately with your name and number, along with your business name, and I will pass it onto him.
In the spirit of full disclosure, I will say that he offered to pass onto me a sum of cash for any referrals (I am unsure if he was serious or not, and will believe it when I see it), but that I am interested in helping my friends on the forum stay out of the clutches of litigation-happy consumer leeches with or without any extra incentive (although if he was serious, I sure as hell ain't gonna run him out of my house if he comes by waving a check! LOL) I have absolutely no idea of how much any of this costs, but I understand that incorporating can be expensive, so if this is a better deal in the liablity long run, it might be worth it.
I may even look into the possibility of getting into this sort of sales if it turns out to be on the up and up - I have been looking for something that I could use my sales experience on that isn't just a way of cleaning people out for no good reason.
-- Soni (firstname.lastname@example.org), September 06, 2001
There are any number of outfits that specialize in online incorporations in Nevada and Delaware. Personally, I guess experience has taught me that if I'm going to be sued for a business deal, I'm going to be named individually regardless of my business structure. All of these things sound good but this is America and anyone can sue anyone for anything. Maybe I'm just skeptical or a cynic. Maybe I'm right. I don't know. This is definitely just one guy's opinion here.
If you're looking for a sales job like that you might want to look at selling prepaid legal services. It seems to be an exploding area that also takes advantage of the litigiousness surrounding us all. Like anything else, though (even car sales), the top 5% make 95% of the money. Good luck with whatever you decide. I hope this helps. ;o)
-- Gary in Indiana (email@example.com), September 06, 2001.
If you are the main "chief cook and bottle washer" for the business, incorporating won't help much--because say if your company makes a widget and the widget breaks and hurts someone, someone will want to know who made the widget. If it is a company of one, and that one is you, they can pierce the corporate veil and come after you and your assets.
If you need info on protecting your assets, Nolo Press has excellent books on the subject, and even if you go to a lawyer, at least the books will give you an idea of the whole process. www.nolo.com
Another option is to still be a sole proprietorship and just carry umbrella coverage for a million or more.
-- GT (firstname.lastname@example.org), September 06, 2001.
The big problem with prepaid legal services is that they only cover really basic stuff, like a simple will, that anyone can do using Nolo- type forms. For anything else they are useless. I think people are confusing prepaid legal services with having a lawyer on retainer, and it is not the same thing at all, not for what you're paying on these plans.
Certain assets are protected from creditors and lawsuits too, I think, but it would be nice to hear from a lawyer or financial planner if there are any on the forum.
-- GT (email@example.com), September 06, 2001.
Here is what I have found out on the search engines. The first bit is an excerpt of a new law, and the last bit is an excerpt from a website offering these services, which is presented here for informative purposes only.
Section 1. Chapter 78 of NRS is hereby amended by adding thereto a new section to read as follows: 1. Except as otherwise provided by specific statute, no shareholder, director or officer of a corporation formed under the laws of this state is individually liable for a debt or liability of the corporation, without regard to whether a court determines that the stockholder, director or officer should be considered the alter ego of the corporation or that the corporation fiction of a separate entity should be disregarded for any other reason, unless: ( a) Otherwise provided in an agreement to which the stockholder, director, or officer is a party; or ( b ) A court of competent jurisdiction finds by clear and convincing evidence that; (1) The corporation is influenced and governed by the stockholder. director or officer; ..."
By incorporating in Nevada,you... Save money:
No corporate income tax No taxes on corporate shares No franchise tax No personal income tax Save time and effort:
Minimal reporting and disclosure requirements Meetings can be held in any state No Nevada residency requirements No U.S. citizenship requirements Safeguard your privacy:
No IRS information sharing agreement No public record of stockholders Run your corporation your way:
Your directors don't have to be stockholders Your directors can sell, purchase, hold or transfer own stock Your directors can issue stock for capital, services, personal property or real estate, including leases and options Your directors determine the value of stock issued Secure peace of mind:
Personal assets of officers and directors are protected
-- Soni (firstname.lastname@example.org), September 07, 2001.
Soni, I think in subparagraph b), where it says " a court of competent jurisdiction", etc. is where a competent attorney could pierce that corporate veil enough to sue--and like Gary said, this is America, you can sue anyone anywhere. It may be a Nevada Corporation, but people can sue you wherever you have a "presence" in a state, whatever state it is.
The other problem I see is if you get into this sales business and go around telling people they can't possibly be sued, their assets are perfectly safe, etc. Unless you have some kind of disclosure on the form saying that you are not a lawyer and therefore can't give legal advice....you could be sued because people are relying upon your expertise in the matter.
Incorporation is a layer of protection, but nothing is foolproof, and if there is no thriving business, just assets, you might be better off with a trust.
-- GT (email@example.com), September 07, 2001.