Protect your assets

Knowledge • Informed Decisions • Execution of Evolving Plan

PROTECT YOUR ASSETS, PROTECT YOUR HOME

Provided by
Michelle L. Grenier, Esq.
Michelle@ContactMyLawyer.com

I.  GENERALLY

When starting a business you should consider taking steps to protect your personal assets, including your home, from business creditors and other business claims.  First, consider creating a separate legal entity under which you will conduct your business, e.g. INCORPORATE, set up a LIMITED LIABILITY COMPANY, etc.  Second, consider non-business protection options such as, filing a DECLARATION OF HOMESTEAD for your home and the property surrounding your home.

II.  CREATE A SEPARATE LEGAL ENTITY

By creating a separate legal entity (e.g. Corporation, LLC or Trust) under which you will run your business, you will reduce the risk and exposure to personal liability for most acts or omissions of the business.  You will remain personally liable for some acts, e.g. gross negligence and other intentional and fiduciary duty acts.  However, by running your business as a separate legal entity, you will greatly reduce your exposure to liability.

III.  DECLARATION OF HOMESTEAD

In addition, if applicable in your jurisdiction1 consider filing a DECLARATION OF HOMESTEAD at the Registry of Deeds.  The filing fee is typically nominal, and as a result of the filing of such Declaration, the equity in your home will be protected from most creditors in an amount designated by your State legislature.  For example, in Massachusetts, the DECLARATION OF HOMESTEAD protects the equity in your home up to Three Hundred Thousand Dollars ($300,000.00)and after the owner(s) reach the age of 62, the protection increases up to Six Hundred Thousand Dollars ($600,000.00) if each owner files a separate Declaration.  The Declaration filing fee in Massachusetts is approximately Thirty-five Dollars ($35.00), a small price to pay for such protection.2 The home for which you file must be your principle residence.

(c) 2002-2003 Michelle L. Grenier, Esq.

*******FOOTNOTES*******

1. Some jurisdictions do not recognize the filing the Declaration of Homestead.  
    Consult an attorney regarding your specific situation and jurisdiction.
2. Filing fees and statutory protection is subject to change.  Consult an attorney
    regarding your specific situation.