Asset Protection Basics: Distinguishing between inside vs. outside liability
One of the foundations of any asset protection plan is determining what types of liability a person needs to plan for. I’ve defined inside vs. outside liability before, but it’s a very important topic, so it’s worth further exploration in this video.
Do you have a plan to protect yourself from inside liability? Or outside/person liability? Asset protection planning is like buying insurance…you have to get it in place before something bad happens!
Colin Ley is a Seattle asset protection attorney. He is also the co-founder of LayRoots along with his wife, Shreya Ley.
Inside vs. Outside Liability Video Transcript
Hi, Colin Ley here, with LayRoots. I want to talk to you about inside and outside liability. When we’re talking about asset protection or reducing liability, it’s important to distinguish between the types of liability. There are different kinds. There’s inside liability and outside liability. Outside liability is also called personal liability. Let’s look at these.
Inside liability are liabilities that arise from, in this example, from your business activities. You have your LLC, and maybe you have a contract dispute, something like that, breach of contract. That’s an inside liability. You have here, LLC here, to protect you from those types of liabilities. Outside liability or personal liability are liabilities that come from, well outside of business, but from your personal life. A great example is a car wreck. That’s something from your personal life. You could hurt somebody with your car. Maybe -I don’t know- you don’t have enough insurance, or the claim grows and you don’t have enough insurance to cover it. Anyway, that’s a liability that comes from your personal life, outside your business; however you want to think of it. That’s an outside liability, and this is an inside liability.
These LLCs insulate you from those liabilities, and generally your LLCs are protected from outside liability; if your companies are set up in the right way. That’s it, inside/outside liability. If you have any questions, please hit us up at support@layroots. Thanks for watching.