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Online Asset Protection Quiz.

How can we make our stock less attractive to prospective litigants?

The answer is to protectively title your corporate shares to a limited partnership or some other entity. But you have other tactics available that can reduce the value of your corporate shares to a creditor. For example, you may 1) issue irrevocable proxies which assign your right to vote your shares. If you issue a proxy to a relative, for example, a creditor who seizes your shares can’t vote your shares since you have irrevocably assigned your voting rights to your proxy holder. If the creditor gains no voting rights, it significantly lessens the stock’s value to the creditor (depending upon the importance of voting control). You can also sometimes exchange voting shares for non-voting shares, which similarly lessens the stock’s value. 2) You may also allow the corporation to assess your shares. Corporate shares assessable by the corporation are unattractive to a creditor because the creditor assumes the assessment. A potentially large assessment by the corporation correspondingly lowers the shares value to your creditors. 3) Another possibility is to dilute your stock ownership. Why allow your creditor to control your family business? You can sell additional shares to other family members, or to family controlled entities (trusts, limited partnerships, etc.) to prevent your creditor from gaining control over the corporation. Or you may redeem your shares. As another example, you may title your shares to an irrevocable trust. Finally, you may pledge your shares as collateral for loans. Of course, you can use these tactics in any combination. What is the best way to protect, redeem, transfer or encumber your shares, will, of course, depend on the corporate restrictions and your personal situation.

Categories: Asset Protection
The Presser Law Firm, P.A. - Asset Protection Attorney
Located at 6199 N. Federal Highway Boca Raton, FL 33487. View Map
Phone: (561) 953-1050
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