To understand lawsuit protection we need to understand the difference between an Outside Liability and an Inside Liability.
All liabilities start as an Outside Liability. An Outside Liability is a claim against you, personally, arising from your individual behavior. If the claim is successful against you then these liabilities are trying to get down into your individual assets.
If the claim coming against you is the result of a business you operate, called a sole proprietorship, the you should isolate that business activity in a Limited Liability Company (“LLC”). Once the business is operating under the LLC, the business liabilities (for the most part) are now called an Inside Liability.
An Inside Liability comes from the behavior or assets of the LLC. For example, someone might slip and fall in your store or the company may be accused of breaching a contract. The LLC limits the liability of the owner (you) such that the person injured may only go after the assets of the company–not you personally (as you read more you’ll learn there are exceptions if you are the manager (like the president) of the LLC). You’ll find we only discuss the use of LLCs not corporations. As you read about LLCs on this website you’ll soon realize the reason is that LLCs, in addition to providing Inside Liability protection, also have some (and we emphasize only some) Outside Liability protection whereas corporations, offer none.
Now, back to Outside Liabilities. Now that we have isolated the business liability with the use of the LLC, we still have many other Outside Liabilities that, if successful, will rob us of our hard-earned life savings. Such liabilities are numberless in our litigious society and include claims that an umbrella policy will not cover and claims against you where the insurance company denies coverage. With no insurance, you stand to lose everything.
The number one tool we recommend for most folks in protecting from these other Outside Liabilities is the Nevada Asset Protection Trust (“NAPT”).
To learn more about Outside Liability Protection with the NAPT and Inside Liability Protection with the LLC, simply schedule a free, no obligation consultation with the attorney by clicking the button below.