How a Lawsuit Can Derail Your Financial Plan
You may be surprised to find out that there are many things that can derail a long-term financial plan. You know about having an emergency fund, and planning for a layoff. But have you ever thought of the risk a lawsuit would pose to your financial health? Probably not!!! Thus, anyone who has worked hard to build up a sizeable net worth should consider finding appropriate ways to ensure their assets are protected against potential lawsuits or legal actions.
Planning for ways to protect against a financial lawsuit is all the more important for readers that are living in the US. We are, in fact, the lawsuit capital of the world 😊! If you have not considered how to properly protect yourself and your financial assets from a lawsuit, then you are flying blind!
Check out the following types of lawsuit protection and consider what you can do to protect your assets:
Types of Lawsuit Protection
Financial protection from a lawsuit can come in many shapes and flavors. Here are a couple examples of lawsuit protection or legal protection that can help you to shield your assets – these are listed in question and answer form:
Do I Need Umbrella Insurance?
umbrella insurance is “extra” insurance that covers you above and beyond the typical insurance coverage you would receive with a home owner’s policy or your car insurance. Typical umbrella insurance plans cover your from where your car/home insurance stops up to one-million dollars, or more. Check with your home or auto insurance company to see if they offer this important type of coverage.
Most car or home insurance stops somewhere close to $250,000 for medical damages to someone else. What happens if someone gets hurt on your property or by your car and has higher medical bills? If you have a high net worth, guess who the insurance company is coming after? Nothing is more depressing than working your whole life to build up your assets only to see them taken away in a lawsuit!
Do I Need Prepaid Legal Protection?
if you do get into trouble and find yourself the target of a lawsuit or legal action, having pre-paid legal protection from a company like LegalShiled.com can be a god-send. Prepaid legal protection is basically like having “lawsuit insurance” in that your legal fees are pre-paid using a monthly fee.
Think of prepaid legal protection (from a company such as LegalShield ) basically as Tripple-A but for legal coverage instead of vehicle coverage. Think of the peace of mind you would have knowing you can pick up the phone and ask for legal advice whenever you need it!
How do Retirement Accounts Protect my Finances?
the use qualified retirement financial plans such as an IRA, 401(k), 403(b), 457(b), etc. can help protect your assets. These special types of protected retirement accounts are normally exempt from many types of cases or lenders and legal proceedings.
How Can I Protect Real Estate from a Lawsuit?
US real estate law is setup to protect the primary residence in a great number of cases involving financial bankruptcy. In other types of lawsuits, maybe not so much… If you want to get really fancy to help protect your real estate assets, check out details around titling your primary residence as “tenancy by the entireties.”
Tenants by entirety (TBE) is a method in some states by which married couples can hold the title to a property. For one spouse to modify his or her interest in the property in any way, the consent of both spouses is required by tenants by entirety. This can help save your butt if things go south in a lawsuit where both spouses are not implicated!
Will a Trust Protect My Assets from a Lawsuit?
As your financial assets continue to grow, you may want to consider an irrevocable trust at some point. What is a trust? The basic definition of a trust is: a trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.
Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, to save time, and to reduce paperwork. A trust can be a good tool to help protect your assets from creditors and lawsuits. It basically “locks” away your money as property of the “trust”, and not the person. The disadvantage of a trust is that they will require money and time to setup. Trusts can also be very difficult to unwind. If you’d like to learn more about irrevocable trusts, then check out this link: what is a trust?
How Does Business Ownership Protect my Personal Assets?
Business ownership can go a long way towards ensuring your personal assets are protected from a lawsuit. If you were to start a business as a sole-proprietor, then creditors or others can sue you for the amount of money in your business as well as come after your personal assets! Not good!
However, if you setup an LLC or setup a corporation, then these entities will shield your personal assets from any sort of business liability. A LLC or corporation basically creates an impenetrable wall between your personal and business assets. This can be a godsend if you own a business and find yourself the target of a lawsuit.
Final Thoughts
Asset protection is a crucial point in financial risk management. Learning tips and tricks to protect your financial assets from a lawsuit can save you thousands of dollars if the unfortunate were ever to happen to you. Nothing is more disheartening than working a lifetime to build up your net worth only to have it taken from you in legal proceedings.
As you can see from reviewing the list above, a lot of this is complicated stuff! The normal everyday-Joe would not be expected to understand these financial tips fully or put all of these ideas into practice. This is why prepaid legal services like LegalShield.com can be so helpful. Life can be very unpredictable, and laws can be confusing. LegalShield has done the hard work for you and assembled a team of legal professionals that can help you in all walks of life. Wouldn’t it be great not to stress about the complexities of entering into a lawsuit?
If you ever do find yourself on the wrong end of a legal proceeding, having a prepaid legal team at the ready can mean the difference between winning and losing a case. People can sometimes act hastily when they find they are the target of a lawsuit and say or do things that can be damaging to their case. The team with LegalShield will audit your case and examine all of your choices with you. This could be as simple as assessing a report, composing a request letter, or influencing a phone call all to benefit you.
Remember, a lawsuit can not only derail your life, but also your financial planning. Check out the LegalShield.com website today and consider whether you’d like the comfort of knowing you have an expert team of lawyers on your side!
