Although bankruptcy is never comfortable dinner table conversation, it was the topic at a recent luncheon put on by the Estevan Chamber of Commerce. The event was an informational talk, in support members of the local business community. Over lunch, several experts from MNP discussed the protection of personal and corporate assets, on Sept. 10.
Pamela Meger, vice president and trustee in bankruptcy, provided advice to guests about the kinds of bankruptcy scenarios her clients encounter, and how its important to always be vigilant for, and protect against, business decisions that could lead to those particular scenarios.聽
鈥淭he biggest thing with asset protection is, protecting against an event that already happened is too late,鈥� said Meger, describing a common theme in each of the presentations. All three speakers emphasized the importance of planning in advance, since it is a superior strategy to waiting until something averse happens, in terms of asset protection.
Meger discussed fianancial liabilities and methods of protecting personal and business assets. In her talk, she provided advice on the importance of using a holding company to protect assets rather than an operating company, the transference of assets to businesses and family and the complications that can arise from that, the management of the debt of other companies when providing them loans and the protection of one鈥檚 own business against risks.
Daryl Donovan, a business advisor, spoke about the importance of due diligence and caution when doing business, and how to deal with the many potential risks of running a business.
In his speech, Donovan spoke to guests about risks that included partner-related risks, warranty work, delegation of responsibility, family involvement in business, the delegation of company cards and vehicles, reputation, among others.
Tracie Heier, a tax specialist, described to guests how tax rates are lower for businesses than if they were levied on money contained in personal accounts, and how such a difference can be used to the advantage of business owners.
鈥淚 get to talk to people on their highs as they accumulate a lot of cash in their company,鈥� said Heier. 鈥淚 sort of help you when you鈥檙e at your highest point, getting assets and trying to protect them as best as we can. As a result of the tax deferrals you can have from leaving all the money in your corporation, corporations can incur a lot of equity and grow big.鈥�
Heier went over how to utilized of several asset protection transactions. These included the use of holding companies, which are then paid through dividends, or are used to loan back dividends to the operating company. Another method of asset protection Heier spoke of was the use of family trusts, in which wealth can be distributed for family members of the owner of a business, through dividends, making use of lower income brackets that such a transaction allows.聽
