LEGALITY IN BUSINESS

Many a times we work so hard to become comfortable and be able to afford everything we ever want or need as well as to provide for our families. This desire to thrive and excel often gives us sleepless nights, late night work, less social life, less time for ourselves and those we love. All in the bid to prosper and be self-sufficient, we work so hard to accumulate assets and wealth. In some cases, people lose those that are valuable to them as they go on this journey.

More often, in the journey to wealth and comfort, we often fail to realize that sometimes life happens, a fire outbreak could lead to the loss of property, then what happens next? All you have worked so hard for would be no more.

Death or incapacitation could happen, and the children or family you worked so hard to give the best life would be left with little or nothing due to either improper management, family conflict, chaos or the greed of interlopers.

Hence, as we accumulate wealth and assets, we must ensure that there are proper asset protection structures embedded in how the assets are owned.

THE GLOBAL BUSINESSWOMAN AND ASSET PROTECTION Mercy

Edukugho-Aminah TEP

Mercy is the Managing Director of 1st Fiduciary Ltd

WHAT IS ASSET PROTECTION? Asset Protection is the adoption of strategies to protect one’s wealth. It refers to strategies used to guard one’s wealth from seizure, judicial claims, taxation, expropriation and other loses.

Asset and wealth protection planning is very important and without such planning you are creating a threat to the preservation of your wealth. It is important that you plan now to reduce or eliminate adverse economic consequences from lawsuits or other claims which may arise in the future.

An asset protection plan has two goals:

a. To make access and the enforcement of claims or judgments against protected assets difficult, if not impossible; and, b. To allow you to plan and decide who will have the beneficial enjoyment of your assets and wealth during your lifetime and afterwards.

The underlying principle of asset protection planning is the separation of asset ownership from control, there are structures that can be utilized to achieve this separation.

Implementing an asset and wealth protection plan comprises of

a. Identifying the possible threats; and b. Understanding the benefits of instituting a plan in order to protect and preserve assets before a problem arise.

WHAT COULD BE THE THREATS TO YOUR ASSETS AND WEALTH? Listed below are some threats that can arise to your assets and wealth ♦ Professional liability in respect of claims brought against you. ♦ Personal liability in instances where you operate your business as a sole proprietor ♦ Breach of contract or negligence claims from persons with whom you have transacted business. ♦ Forced heirship claims from the executors or administrators of your spouse, children or beneficiary’s estate. ♦ Political and economic instability in your country ♦ Expropriation of assets by aggressive government agents ♦ Imposition of exchange controls ♦ Onerous government regulations ♦ Family provision or inheritance claims brought by a spouse, former spouse, child or other dependents. ♦ Divorce or separation proceedings from a former spouse; and ♦ Claims in bankruptcy.

HOW DO YOU PROTECT YOURSELF?

♦ Make use of business entities, avoid owning assets in personal name ♦ Make sure you have sufficient and adequate insurance ♦ Segregate assets and transfer the assets into a Trust ♦ Put in place an asset protection plan, some asset protection strategies are discussed below:

1. Corporations, Limited Partnerships, and

Limited Liability Companies.Owners of corporations, Limited partnerships, and limited liability companies are typically protected by the government through limited liability laws, whereby individual owners are not held accountable for the business entity or organization’s debt. 2. Asset Protection Trust. An Irrevocable or foreign situs asset protection trusts is a trust that holds assets protecting the assets from 3rd parties or creditors.

3. Transfer of Property Right

A person may transfer his/her legal right to an asset to their spouse, relative, or a trusted friend to protect it from creditors’ claims. This allows the debtor to possess their asset without the risk of losing it to creditors. Though, it presents a huge risk in the case of conflict between family members or friends, since they will legally own the asset.

4. An Integrated Overall Estate Plan

It is optimal when you have significant assets and wealth to adopt a coordinated, integrated approach to protect your assets during your life, hence a long-term estate plan should be considered. Setting up a estate plan is important, this enables you to maximize the wealth protection and benefit of your assets during your lifetime as well as maximize the assets you ultimately can transfer after your death.

When done the right way, the implementation of an integrated asset protection and estate plan strategy looks beyond traditional post-mortem planning. It looks at how you manage your assets today, and how that management can be structured and coordinated to maximize ease of use and flexibility in the event of unforeseen events as well as to minimize estate taxes that may fall due.

In conclusion:

a. Plan your asset protection ahead of time! Set up your plan well before you would need it. b. Separate your personal assets from business assets. c. Avoid sole proprietor as it puts you at risk of losing your assets, as it is easy to seize property that is under your name. d. Ensure that your business assets are safe in a business entity.

Mercy Edukugho-Aminah TEP

Mercy is the Managing Director of 1st Fiduciary Ltd (www. firstfiduciary.ng), a Private Client focused firm located in Lagos, Nigeria and has garnered over 15 years of experience spanning Capital markets, Legal Advisory, Energy, Governance & Compliance, Trust & Estates. This includes advising several HNI and UHNW individuals and families on local and cross border wealth management, legacy planning and private philanthropy.

Mercy has advised clients on matters such as Family Trusts, offshore Foundations, Private client philanthropy, Family Governance, Succession Planning, Next Generation, and has worked with Private Client specialists in the areas of Law, wealth management, tax, luxury asset insurance and fiduciary services.

Mercy is also responsible for business development in the Family Enterprise section of the firm which provides business planning and strategy solutions to family owned and owner managed businesses, focusing on strengthening and transitioning of the business, mergers, acquisitions and international expansion strategies.