Personal Assets with a Small Business

Serving the needs of estate planning and probate clients in Mercer Island, Washington, Geoffrey Garrett has dual roles as a financial advisor and attorney. Geoffrey Garrett’s areas of focus including assisting business owners in protecting assets, and he maintains an in-depth knowledge of complex trusts and the trust administration process, as well as business structures such as sole proprietorships.

For a majority of those who operate small businesses, sole proprietorship is the legal structure selected, as it does not take much paperwork or extra filings to get the enterprise up and running. A drawback of this structure is that it places the owner's personal assets, like one’s home, car, and bank account, at risk in the event that the business is sued. A solution for avoiding potential legal issues is to create a trust related to ownership of the business.

Setting up a trust shields the owner in certain respects, should business-related litigation occur. However, for some businesses, creating a trust may be too expensive or time-consuming, and managing it may not feasible. In such cases, taking simple steps to separate your personal finances from the business can act as a safeguard. This extends beyond establishing separate bank accounts to opening a dedicated company credit card, with no commingling occurring between one’s business and personal accounts.