If you are an established business owner or an entrepreneur just starting out, it is important for you to be aware of the need to develop a creditor protection strategy. Most business owners, officers and directors don’t realize that their personal assets are at risk for creditor claims in the event that something goes wrong with their business.
In fact, a study has confirmed that three-out-of-four Canadian small business owners have not taken the adequate steps to protect their personal assets!
The types of liability that business owners, officers and directors can be personally liable for are:
- Any debts for which the business owner, officer or director has given a personal guarantee
- Any statutory debts such as wages and vacation pay
- Any source deductions owed to the Canada Revenue Agency
- Goods and Services Tax and or Provincial Sales Tax
- Health and safety violations
- Environmental damage
One of the easiest ways to protect personal assets: Investments with insurance benefits!!
Because certain investment products issued by insurance companies are regulated under the Insurance Act, they have the potential to protect personal assets from creditors in case of personal or professional liability, or a business failure. CREDITOR PROTECTION IS ONE OF THE MOST VALUABLE BENEFITS of investing through a life insurance company, and in 1996, the Supreme Court of Canada upheld the creditor protection afforded to insurance investments under provincial legislation.
You can gain the comfort in knowing that as long as your investments are made in good faith, and a proper beneficiary is named, you can protect your hard-earned personal savings from professional liability. In fact, insurance-based investments provide an inexpensive means for you to protect your family’s wealth and provide potential growth from the underlying investment.
For additional information on strategies for protecting personal assets from creditors or tips that can help you manage your risk, please contact Health Risk Services. We will also be happy to educate you to the most appropriate creditor protection insurance vehicles available for your particular situation!
Let Health Risk Services assist you in making KEY PERSON insurance part of your business plan!!
DISCLAIMER: Please be advised that the information on this web site is intended to present a broad variety of general information as simply and accurately for your knowledge as we possibly can. In no event does this information form part of or apply as a legal document. Therefore, please note that rules, conditions and industry practices discussed may be changed over time. Please consult Health Risk Services Inc. with specific questions.
E & O Insurance applies