Lawyer Reveals Ways to Protect Assets From Lawsuits
In Florida, a man serving 12 years in prison for manslaughter for killing
a person while driving drunk is suing his victim's survivors for the
pain and suffering he is experiencing in prison.
Just as surprising, a mother in Illinois is being sued by her two daughters,
now in their 20's, for bad mothering while they were teens, including
setting curfews, arguing over clothing prices and not sending care packages
while they were in college.
Even more frequently, the seller of a business is revisited two or three
years later by the buyer who could not maintain the business. The buyer
tries to find a way to sue the seller by blaming him for his business failure.
“You have these types of cases all the time,” says Hillel L.
Presser, a lawyer specializing in domestic and international asset protection
planning and author of
Financial Self-Defense (www.assetprotectionattorneys.com.) “Even if the person being sued
wins the case, there are no real winners because he could end up spending
thousands of dollars in legal fees.”
“I had one case where a jet skier ran over a snorkeler. He had a
$3 million umbrella insurance policy, but the insurance company refused
to settle for the $800,000 the snorkeler asked for. The jet ski driver
ended up losing $4.5 million and he had to turn around and sue the insurance
company. The only winners here are the lawyers," Presser says.
It is not just the wealthy who find themselves the defendants of frivolous
law suits, although the rich make easy targets, says Presser, who represents
nearly two dozen professional athletes but lectures to audiences of all
“If one of my athletes who has $50 million gets sued for $5 million,
he still has $45 million left. But if a person with $200,000 gets sued
for a million dollars, he is wiped out,” Presser says.
“It is the duty of financial advisors to warn people to protect their
assets. There are a number of measures that can be taken to protect yourself
from being sued. If the financial advisor fails to do that, his client
can lose his money and the advisor loses a client,” the lawyer warns.
“For every 60 minutes a person spends making money, he should spend
60 seconds thinking about how to protect it.”
The first step is to inventory a client's assets. Many people own more
than they think they do, including such things as intellectual property
rights, Presser says.
Presser says advisors should know professionals who can help with asset
protection and refer their clients to them. The professional should know
federal state laws on asset protection, he says.
In some cases, assets are automatically protected from lawsuits. For instance
in Florida, houses and life insurance are protected.
Only assets that are exempt from lawsuits should be in the owner's
name. All other assets should be titled to corporations, limited partnerships,
domestic trusts and other entities that offer protection.
Another tactic is to make assets valueless. “Take out a $2.9 million
mortgage on your $3 million house and use the money to establish a trust.
It is easier to protect liquid assets than property,” he says. “Make
yourself unattractive to sue.”
Presser notes that he is not advocating anyone do anything illegal. None
of the actions are taken to avoid paying taxes or to hide assets in a
divorce. If assets are held internationally, all required reporting should
be done.The goal is to make yourself or your client an unattractive lawsuit
target by putting as much as possible under another entity rather than
in your personal name. That way the owner can enjoy the asset but not
be at risk of losing it.
“There more assets you have exposed, the more enticing a target you
become, and the less money you have the more catastrophic the outcome
can be,” Presser says.
YES, YOU CAN LOSE EVERYTHING!
You may think that your wealth is safe and that you don't need protection.
But don't delude yourself and accept reality — for every 60
minutes you spend making money, spend 60 seconds thinking about how to