Its not that I have anything against attorneys, it’s just that many of them are paid to kill deals or cause problems for the unexpected wealthy in this county. Here is what I mean. There is a large population of attorneys that take cases on a contingency fee basis. This means that they only get paid on money they are able to collect for their clients. It is normally a hefty fee like 40 or 45 percent. The joke is that these attorneys chase ambulances waiting to sue the next person they can. The key here is that they are paid on what they are able to COLLECT.
These attorneys do not want to take cases unless they feel like they can collect. It is not really that tough to get judgments but it is quite another to collect on judgments. If you have a judgment against someone with no assets there is little chance you will ever see a dime. Because of this, a simple way to not get sued by ambulance chasers is to appear like you have little to no assets.
You can accomplish this by not owning assets in your personal name. Especially assets like real estate because these come up in public record searches and it is easy to see what the asset is and how much equity you have.
Here are some ideas to appear broke:
- Use Trusts, LLCs and corporations
- Use lines of credit or mortgages to encumber property
- Carry assets in a company that does little to no business and is unlikely to get sued
- Split assets among spouses
Obviously insurance should be a large piece of you asset protection plan so talk to your agent about additional liability coverage. These are known as umbrella policies and are normally dirt cheap. It is also important to carry above the legal limit for liability coverage on your auto insurance. It is very possible that a lawsuit is caused while driving so having enough coverage is crucial.
Of course you will want to talk to a good asset protection attorney to help explain when and why to use different entities and possible even help you set them up correctly. Setting up an entity incorrectly or not running it correctly extinguishes any asset protection you think you have. Please pay special attention to this there is some paperwork that is really simple to do that will keep you out of trouble. There is more to running an LLC than just registering the company with the secretary of state and starting a bank account.
(This article is for education purposes only and is not meant to replace competent legal advice. I am in no way supplying legal advice.)
