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Asset Protection - They Took Everything

Imagine you and your spouse are out for a drive on a rainy day, a child runs into the road, and the worst possible thing happens.  In addition to the emotional shock and heartbreak, you soon learn that you have been named as defendants in a wrongful death lawsuit.

You call your auto insurance agent and ask how much coverage you have in this case, and are told that your coverage is the minimum the state requires, which is $300,000. Your insurance agent advises you that the company will assign a defense attorney to defend you.

Some days later you meet with the defense attorney who has requested a complete list of your financial assets and liabilities.  As you prepare the financial statement you realize what a strong financial position you are in. You have a mortgage-free residence valued at $300,000, a $400,000 IRA, $875,000 in stocks and bonds, and $275,000 in cash accounts.  Frankly, most couples in their 50s would feel quite secure with a net worth of $1,850,000 and several years to earn prior to your planned retirement.

Two days later you receive a complaint from the attorney for the child’s parents claiming damages of $5,000,000.  You forward the complaint to your defense attorney and he advises you that, if you proceed to trial, you are quite likely to lose.

He suggests that you might want to engage in some planning to protect what you can, but because the lawsuit has occurred, there is little you can do to protect your assets. You are forced to hire a bankruptcy attorney to determine how much of your property can be protected from the $5,000,000 lawsuit by filing for bankruptcy.  The bankruptcy attorney requests a $25,000 retainer. 

It dawns on you that you thought about meeting with your estate planning attorney to discuss asset protection, but decided that you were protected with your insurance and didn’t really have time for a meeting.

Unfortunately, scenarios like this occur every day in America; and once you have a legal problem it’s too late to do asset protection planning.  It’s like trying to buy insurance for your boat while it’s sinking in the midst of a storm.  Planning has to be completed when the skies are clear, and before anyone has any possible claim on your assets. 

We recommend that you contact us soon to learn about your family’s asset protection options.

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