Dude, Where's My Commission?
Imagine losing your hard earned commission to a lawsuit? This scary thought could become a reality in today's lawsuit crazed society.
Litigation is America's fastest growing business, and why not? Plaintiffs have everything to gain and nothing but a few hours' time to lose. Even if a case seems utterly ridiculous, defendants are encouraged to settle just to avoid potentially astronomical legal fees.
More than 100 million lawsuits are filed each year; one in three people will be sued in the next 12 months. If someone thinks you've got a lot to lose – and thus, they've got a lot to gain – you become a choice target. If you don't think you have enough assets to need protection, then you are making yourself an easy target. People who are less affluent are just as vulnerable as those who are more affluent: if a person with $100,000 in assets gets sued for $1 million, they'll be wiped out, whereas the person with $5 million can survive a $1 million lawsuit.
Consider two real examples of frivolous lawsuits that have actually made it into the court dockets this past year.
- A couple sued an airline over a mid-air cockroach sighting. The Plaintiffs claimed that seeing cockroaches crawl out of an airplane's vents caused them great distress and forced them to throw away their luggage for fear of cockroach infestation.
- A fugitive sued his hostages for escaping when they orally promised him that they would not try to escape. The fugitive claimed that an oral contract "not to escape" was breached and that he was entitled to contract and personal injury damages as a result of being shot by the police during the capture.
With unprotected assets, you are not only susceptible to frivolous lawsuits but also those lawsuits that are rightfully filed. A very common example of this is getting into a car accident while borrowing or renting someone else's car (or even using your own for those salespersons who travel). If parents loan the family car to their child, they can be sued if an accident occurs. The same goes for anyone who loans a car to a friend in need. Similarly, if you get into an accident using a rental car, you may get sued personally if the maximum liability insurance on the car doesn't cover all the damages sought. Another common example is an unhappy client. We have all been in situations where we have done business with someone who ended up unhappy and threatened to sue. These types of occurrences happen every single day and can easily happen to you.
Further, here are some great tips to keep yourself from becoming a victim and losing everything you've worked so hard to earn.
- Account for ALL of your assets: Not sure of what you have? Don't wait for a plaintiff's lawyer to tell you exactly what that is before he or she takes it from you. Take stock of valuable domain names, telephone numbers, intellectual property, potential inheritances, and other non-liquid assets.
- Liability insurance is no guarantee: Buy as much insurance as you can; it's cheap and it helps you sleep at night. But realize that 70 percent of claims will not be covered. Your coverage may be inadequate for a particular suit, and your insurance company may go bankrupt. Having insurance and an Asset Protection plan is the belt-and-suspenders approach for hanging onto your pants.
- Convert non-exempt assets into exempt assets: State laws protect some personal assets from lawsuits and creditors. Those assets typically include your primary residence; personal items such as furniture and clothing; pensions and retirement funds; and life insurance. Find out the exemptions for your state and convert non-exempt assets, such as cash, into exempt assets, such as life insurance.
- Transfer your assets to a protective entity: The key to Asset Protection is to own nothing while controlling everything. Transfer any non-exempt assets out of your name to protective entities such as trusts, limited liability companies, limited partnerships and others.
- Encumber your assets to the extent necessary: Another great way to protect your assets is to take their equity away by encumbering them with liens, mortgages, and so on. The money that results from encumbering your assets can then be placed into a protective entity. For example, if your house is worth $500,000 and the mortgage on your house is almost paid off a creditor may try to acquire the equity in your home to satisfy a judgment. On the other hand, if your house is worth $500,000 but has a $450,000 mortgage, there's not much a creditor can get out of pursuing your home therefore you become a less desirable defendant.
- Don't loan out your car – even to your kid: If your children are going to drive, they should drive cars titled in their name alone. And if they pay for the cars themselves, you add another layer of protection. Courts may find that parents who are obviously paying for their children's cars liable to some degree, even if the car title is in the child's name.
For more information regarding your assets, schedule a complimentary preliminary consultation with me by going to my website and filling out the Contact Us form, www.AssetProtectionAttorneys.com, via E-mail,
info@AssetProtectionAttorneys.com, or by calling my office, (561) 953 1050.
For a limited time only I am also offering complimentary copies of my latest best selling books on Asset Protection. To request the books go to www.AssetProtectionAttorneys.com and fill out the Contact Us form on the bottom left hand side of the page.