One of the greatest fears that most people have is of getting sued for some reason or the other, and the vulnerable state their assets will be left in if that happens. It is important for you to know which assets you can protect in case you think there is a chance that you may face a lawsuit at some time in the future.
We’ve put together some tips that will help you safeguard your property, but make sure you get in touch with a lawyer to understand exactly what you need to protect and how you should go about the process.
Assets Which You Can Protect
Getting sued is often a complicated situation, because of the mix of state and federal laws, and one of the things that creditors will take from you is your assets, which will leave you devastated. Though each case is unique in its own way, the fears and concerns are the same.
When you’re dealing with asset protection, however, remember that it’s important not to move assets to a family member’s name when you think you are about to be sued – that will come off as suspicious activity and is liable to get you into even more trouble!
As you start thinking about asset protection, classify them in three different sections – Home, Retirement Accounts and Taxable Accounts.
Protecting your home depends on where you live, as there are some states that protect your home from creditors. This is called a ‘Homestead Exemption’, and may offer full or partial protection to your home in case of a lawsuit. However, this is not applicable in the cases where you have filed for personal bankruptcy, owe money to the state and federal government or if you have defaulted on your mortgage.
Homestead Exemption also applies to primary residences, not on a second home. It’s wise to have some idea of what to do when you are faced with a lawsuit, so get in touch with an attorney and figure out how to best deal with your situation.
Retirement plans and accounts can offer financial protection for your savings, keeping them safe from being taken over by creditors. There are laws and acts which give security to retirement plans, benefit plans and many other employer-sponsored plans. You can be protected from creditor judgement, personal injury lawsuits and even bankruptcy.
Employer sponsored plans are typically limited in their protection, and do not extend to retirement plans which only cover the owner of a certain business or their spouse. In cases like these, your money might be safe from bankruptcy, but that’s about it.
After your home and retirement plans have been protected, you can move on to the money held in taxable accounts, like life insurance plans. Creditors will go to your taxable accounts if they find your home and retirement plans protected, so you have to be on alert. If you have large amounts of savings and assets, consider putting them into a trust for safety.
Your homeowner and auto insurance policies should be sufficient to cover basic liability services if you are charged with a lawsuit for a traffic or domestic accident. It’s important to tell your insurance company about the matter immediately, however, to ensure that they can handle the financial consequences before it gets escalated.
It doesn’t matter what the specifics of a case are, you can always protect your assets if you put your mind to it. Consult an experienced legal or financial expert to discuss your concerns and get personalized advice.
Joel Ray provides expert guidance on an array of topics, centered on securing a sound financial future for you and your family. Joel shares his passion to help others, in meeting their long-term financial goals, through his informative blogs and whitepapers. Follow Joel @life_centra or check out his blogs and videos at LifeCentra today!