08 Feb Avoid Creditors: Keep a Mistake from Becoming Financial Ruin
Avoid Creditors: Keep a Mistake from Becoming Financial Ruin
By: Barry E. Haimo, Esq.
November 18, 2014
A while back I wrote about how someone could get into a car accident while texting and lose all of their money if the person they hit decided to sue them. I was merely posing this as a hypothetical situation that someone wouldn’t want to be in, but here’s an example of a story that falls into this same realm. It doesn’t even involve texting, but I thought it was worth sharing as another illustration of how a single mistake can lead to financial ruin if you don’t protect your assets. Remember, asset protection is about taking assets off the table, making them unavailable to creditors.
Matthew is a successful entrepreneur and wants to protect his assets from people who might bring lawsuits against him. At first you may assume that he is talking about lawsuits related to his business dealings, but that’s not the case. Personal creditors must also be contemplated.
“I’m Trying to Learn from My Friend’s Mistake”
About six months ago, Matthew’s college roommate and old business partner, Larry, had a launch party for his newest venture. Like Matthew, he was doing very well financially and spared no expense for the launch, inviting hundreds of guests and including an open bar. He even made sure that guests who went a bit overboard had transportation available so they could get home safely.
After closing down the party, Larry decided to drive himself home instead of getting a ride because he’d only had a few drinks and felt fine. Besides, he had no desire to leave his expensive car sitting in the parking lot overnight.
You can probably see where this is going. Larry ended up getting into a fender bender and the police were called. The accident itself seemed minor, but the officer at the scene smelled alcohol on Larry’s breath and tested him – he was just a little over the legal limit.
Getting arrested for a DUI was bad enough, but that wasn’t the worst of it. Though the accident seemed minor, the other driver suffered from whiplash and had existingback and neck problems. When the cost of his medical bills exceeded what insurance would pay, he got a lawyer and sued Larry.
Matthew’s friend had no chance at winning when the jury saw the other driver in a neck brace and heard about Larry’s DUI. In the blink of an eye, he lost his entire savings that weren’t protected.
“I’m trying to learn from my friend’s mistake,” Matthew thought. “I’m not planning on doing anything like that or getting into trouble, but neither was he and look what happened to him.”
How Asset Protection Planning Can Help
If you’re found liable for causing an accident the way Larry was, there’s going to be a judgment against you and creditors will be after you to satisfy the amount of the judgment; and creditors won’t just garnish your wages, either. Creditors will go after your savings, your possessions – anything that they can legally get their hands on.
Fortunately, if you engage in asset protection planning ahead of time, you can take specific things off the table so creditors aren’t allowed to take them away from you and your family. There are a number of ways you can do this, but you have to act before something bad happens or the option won’t be available. To learn about the various kinds of asset protection planning and discuss what’s best for your particular situation, the best thing to do is set up a consultation with an experienced estate and business planning attorney.
For instance, Matthew can protect a number of different assets, including retirement and savings accounts, his home and cars, and several family heirlooms that he doesn’t want to see sold off. Hopefully he’ll never be in a situation like his friend Larry, but he won’t have to worry about his financial future if he is.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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Originally posted 2014-11-18 13:30:19.