| Credit Proofing Your Investments |
|
When you own your business, there is the chance that you may face financial stresses, lawsuits, or unforeseen liabilities that could lead to bankruptcy. When you invest your hard-earned capital, consider keeping it as safe as possible from creditors. Segregated fund policies offer a certain amount of protection. If the beneficiary of your segregated fund policy is a child, grandchild, parent or spouse, or you name an irrevocable beneficiary, the investment is protected from creditors during your lifetime. Following death, the investment is protected regardless of who was named beneficiary. The creditor protection is allowed as long as money was not placed in the seg fund with the intent to protect the capital from an impending financial crisis. In most cases, however, the creditor protection is valid when the lawsuit or bankruptcy (in the case of both personal and business situations) is unexpected. Small business owners who are self-employed (such as consultants, dentists, lawyers, and accountants) can benefit from this creditor protection. Consider that anyone who owns a significant holding of shares of a corporation, or serves as an officer or director of a corporation may be liable if lawsuits are filed against that corporation. For example, a sexual harassment or environmental lawsuit could affect any officer or director of a corporation whose directives, indifference, or personal actions affected the situation under scrutiny. Losing a serious lawsuit can put both your corporate reserves and personal investments at risk. Segregated fund policies are considered creditor-proof because seg fund policies are life insurance policies that include annuity contracts. Life insurance legislation protects preferred beneficiaries such as a spouse and children. Legal Note: Recent court rulings have shown that creditor protection may not always apply. You should seek legal advice to determine under what circumstances (especially intentional quick fix shielding of money) a seg fund policy may not give such protection.
This content is protected by copyright and is produced by Adviceon and is not to be copied, or clipped or stored on any computer or republished for any reason. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Please read Copyright & Legal Disclaimer regarding article use which applies to all who use this website. ©Adviceon • email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it • Editor Use Only |
Find out how segregated funds can protect your investments from creditors.