Erickson Financial Solutions Blog
What you might lose in a lawsuit.
See also 1-minute video: What you might lose in a lawsuit.
For good or bad, our society has become more litigious. One day you may be on the receiving end of a lawsuit. What is at stake? Nearly every financial asset if the damages sought are high enough.
You can not prevent a lawsuit, but you can take legal measures to reduce the potential loss. The time to set these measures is before the incident causing the lawsuit ever occurs.
One measure is insurance. Insurance transfers the risk to another up to the limit or the coverage and the extent of the coverage. Often a liability policy can further insulate you than just the ordinary home owner’s or automobile coverage might provide.
Another measure available to married couples is to title asset as tenancy by the entireties. This is ordinarily limited to one’s home, but in some states it may be recognized for other assets.
Another measure is to place the assets in a trust for which you are not the beneficiary. You might have an extra amount of assets you would like passed to an offspring or sibling, but do not want it exposed to lawsuit award. Transferring the asset to a properly written trust may serve that purpose. It is a technical area and you should seek legal counsel to use this tool.
These are but a few strategies available. Which is best for you takes a review of you risks and assets and deciding whether it is cost effective to use any of these.
This video and text is for information use only and is based on information believed to be true. Much of the information is readily available, but some is drawn from Advisor Products and FAClient articles. The reader acts on these ideas at their discretion and should consider consulting an accountant, financial advisor, or attorney. No promise is made that an idea or concept is appropriate or would work well for the reader. This is not an offer to provide legal advice or act as an attorney.