There are lots of lessons to be learnt from Lance Armstrong. Prime amongst them is that it never pays to cheat, but also that if you are expecting lawsuits against you, ensure that you have preemptive measures in place to protect and safeguard your assets. Armstrong would have been a pauper today had he not realized that this day could dawn in his life. He was smart enough to ensure that his assets remained protected and safe.
The truth is that if you have creditors at our door, your money or your assets can never be fully protected, but you can take steps to prevent your creditors from hounding you.
Amy Jetel, a partner in the law firm of Beckett, Thackett & Jetel, in Austin says that preventive protection is like setting up hurdles in an obstacle race. The hurdles can be overcome, but every time the creditor knocks one over, it costs him money, making it cheaper and easier to settle rather than seek the legal route.
Money analysts say that the only way to keep your assets safe is to do good business and ensure that you don’t lose money and that you have enough to meet your financial commitments. The creditor is asking for his just dues. There is no reason why he should not get it.
While this may seem as highly unfair that you don’t repay what you borrowed, there are people who have lost money owing to betrayed trust, chronic illnesses and other reasons beyond their control. It is not dishonesty that prevents them from repaying, but inability that thwarts them – they certainly do not deserve to be hounded.
Other people with young children and only a home and a vehicle to call their assets could well be justified to seek such anticipatory protective methods if they fear losing them to creditors. Moreover, parents would want a settlement for fear that the assets could lead to legal harassment for their children.
For a start people must assess their chances of facing legal action and what they stand to lose if it were to happen. Before finding out what is the solution it is important to know what the risks are?
Buying liability insurance is the first level of safeguarding your possessions. People insure their homes and their cars, but stop short of buying liability insurance, assuming that it will not be necessary. What if your child were to run over a person? Liability insurance would take care of the financial aspects of it, but you must have one in the first place.
Jeremiah Hourihan, executive vice president at Chartis Private Client Group said that the most common liability policy at his company was for $10 million and it would cost the insurer between $2000 and $3000 a year for a comprehensive coverage.
Apart from your own insurance the state where you reside also has laws that provide some amount of protection. Some states mandate that if a house is jointly owned and only one spouse is sued the house cannot be sold or taken. In Florida and Texas, homestead laws mandate that primary residences cannot be included in lawsuits.
401(k) plans and a few other similar retirement insurance plans are also exempt from being taken over by creditors.
You can also put your assets in trusts for minor heirs to get them when they turn majors. This is another lawful way to protect your assets. If trustees are given discretionary powers in distributing the assets amongst the heirs and the trust-deed is carefully worded, it will not only save the assets but also protect the children from harassing lawsuits. It certainly is worth investing in good sound legal counsel in this respect.
Be prepared for lawsuits. How many thought that a storm called Sandy will hit you one day. But it did. So don’t think unfortunate, unwanted things cannot fall your way, because they can.Your Creditors Are Hounding You, Seeking Legal Ways To Takeover Your Assets: How To Preempt Their Move? by Harrison Barnes