In local news, our neighbors in Los Alamitos have been very frustrated by their utility bills from Southern California Gas Co. Why? Because, according to more than 700 billing complaints from customers, the company has repeatedly failed to issue monthly bills on time and extended the billing period for millions of customers from 2014 to 2016. The California Public Utilities Commission will investigate these alleged billing practice violations. When it comes to financial issues, we should all be reminded of the need for asset protection.
Will Southern California Gas Co. be penalized?
The California Public Utilities Commission will decide, after its investigation, whether to impose any penalties for the faulty billing practices alleged by 700 consumers. The Southern California Gas Co. has agreed to cooperate with the investigations and insists it has not committed any violations. The allegations also include complaints that more than 9 million gas bills were based on estimated usage as opposed to actual usage. An administrative law judge will make a recommendation as to what action, if any, should be taken against the company. There could be fines and penalties of up to $50,000 for each day of any proven continuing violation.
When to consider an asset protection plan
Estate planning can have many goals. Asset protection is one of those goals. Being able to protect your assets from creditors and other sources of liability can be very beneficial. As your asset protection lawyer will tell you, preserving as much of your estate as you can for your heirs can only be accomplished if you properly protect your assets.
When to consult with an asset protection lawyer
When should you start your asset protection planning? Now. The general rule is – you need to start planning before your creditor’s start making claims against you. While there are several ways to go about protecting your assets, many are not effective if your creditors have already made a claim against you, or some other financial liability has arisen. Why? Because in many cases, if you transfer your assets after a claim has been made, the transfer may be considered fraudulent. In other words, the courts may say that you transferred your assets in order to avoid paying your debt.
Asset protection planning is not illegal
A common misconception that many clients have is that asset protection planning involves under-the-table transactions meant to evade and deceive. That is not the case. We all have the option of structuring our assets in a manner that is financially beneficial to us, as long as it is done within the limits of the law. In reality, the only time fraud becomes an issue is when the obvious purpose of the asset protection plan is to hinder, delay or defraud creditors from collecting valid debts. This can be avoided by creating your asset protection plan before the creditors’ claims arise.
Be sure to avoid fraudulent transfers
The most common type of fraudulent transfer is when a debtor sells or gives away most of their assets to a relative in order to keep that property out of their creditors’ reach. In order to avoid this situation, you need to plan ahead and make proper transfers for assets before it’s too late. But, how do you know who is a potential creditor? This can be very difficult to determine. So, discuss your financial situation with your asset protection lawyer to be sure you consider the possibilities.
Asset protection tips for business owners
It is equally important for business owners to protect their assets, as it is for an individual. In fact, it may be more important, as business owners typically have more sources of debt or potential liability. Here are some examples of ways that a business owner can avoid potential liability:
- avoid high-risk investments
- exercise extraordinary care when hiring employees
- refrain from loaning cars, boats and other dangerous equipment to someone else
- avoid joint ownership in such dangerous equipment
- include indemnification language in all contracts, where appropriate
Business owners should always keep personal assets separate
Business owners would be wise to keep all of their personal assets separate from their business assets. Put another way, never commingle your personal funds with your business funds. This is true regardless of what type of business entity you have. While there are specific business entities created with the specific purpose of protecting the personal assets of the owner, if those assets are not kept separate, then that protection will likely be lost.
Download a FREE estate planning worksheet today! If you have questions regarding asset protection or any other personal or business planning matters, please contact the experienced attorneys at the Schomer Law Group for a consultation. You can contact us either online or by calling us at (310) 337-7696. We are here to help!
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