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HOW NOT TO PROTECT ASSETS
ESTABLISHMENT OF A CORPORATION FOR ASSET PROTECTION
“My assets are protected
because they are owned by a corporation.”
No they’re not. Your stock in that corporation is an attachable asset.
Your creditor can take the shares of your corporation.
He can then liquidate the corporation and take all its assets.
Sometimes courts will “pierce
the veil” of corporations, including limited liability corporations, and
hold the shareholder liable for corporate acts or the corporation liable
for a shareholder’s acts.
Courts are more inclined to pierce the corporate veil when corporate
formalities are not strictly adhered to and when corporate and individual
funds or assets are commingled.
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Are your
corporate books up to date?
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Do you have proper minutes of
annual meetings?
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Do you pay personal expenses
with corporate checks?
Sometimes, individuals are
sued in their corporate capacity, e.g., for negligence as an officer or
director of the corporation.
Often individuals are asked to personally guaranty the debts of their
corporation.
In either case,
your personal assets are at risk.
Corporate protection is minimal at best and often non-existent.
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