I”m lucky enough to live close enough to work that I can go home for lunch occasionally and I usually watch a local TV station to get caught up on the news and weather. One thing I’ve noticed over the years is the increasing number of commercials on two topics, prescription medications and lawsuits. I did some research and found out at answer.com that the United States has the most lawyers per capita in the world.
What brought this to mind was an article in a local newspaper Keeping the judgment hounds at bay that began with this paragraph.
“America is filled with lawyers, and lawyers sue people. Then those people hire more lawyers to ward off the suing lawyers. It’s all gonzo business for lawyers and a nagging little worry for the rest of us.”
The article then starts by providing some tips to safeguard your personal assets, such as making sure your insurance is tops. If you are married, your marriage license provides some protection if you have joint accounts since a lawsuit against one one person can’t touch jointly owned property. Please note, the article emphasizes that this protection varies by state.
A final tip on protecting personal assets in the article is that most retirement accounts such as IRAs and 401(k)s, pensions, etc. are protected from civil lawsuits if they are set up correctly.
There is more risk of litigation if you own a business and run it as a sole proprietor. If someone has an accident on our premises they can go after your personal wealth. For this reason lawyers advise setting up your business as a “limited liability” or Sub S corporation. They can still go after your business assets, but not your personal wealth.
The last business protection the article recommends is the most ironclad and entails using a lawyer to set up an irrevocable trust. The article mentions some downsides to such a strategy, but you won’t have to worry anymore about being sued. The article stresses that it must be set up properly and must be in place before a lawsuit.