As you get older and retire, you might start to feel some freedom and security from the things you worried about when you were younger. You are done taking risks and ready to reap the rewards of a life spent working and saving. However, if you are fortunate enough to have a little something beyond the basics of shelter, transportation, and a little income, you should not relax yet because you could be one accident away from losing it all.
Who Would Sue a Senior Citizen?
As a retiree who mostly minds his own business, you might not think anyone could possibly have a reason to sue you. However, lawyers in the business of suing know that many retirees have considerable assets and are ripe for the picking when it comes to lawsuits like the following:
- Car accident damages. Once you reach the age of 85, you are just as likely to cause a car accident as a newly licensed 16-year-old. If you do cause an accident and someone is seriously injured, you could be sued for damages beyond the liability coverage you have on your car insurance policy. The plaintiff and his personal injury attorney could come after your life savings.
- Tenant injuries. If you own rental properties and a tenant claims to have been injured due to your negligence, your unprotected assets are fair game. A common claim by tenants is negligent security, meaning you did not provide adequate lighting, locks, or security systems to prevent a break-in or assault.
- Club or Board liability. Are you on a board of directors for a charity or an officer of a club of some kind? If someone comes after the organization because they were injured at an event or on club property, you and the rest of the board members or officers could be held liable.
- Co-ownership with an adult child. Older people often add an adult child to a bank account to make bill paying easier, but this can open your assets up to liability if that adult child is sued for any reason—for example, after a car accident or other personal injury, or another legal judgment. This is one reason we don’t recommend adding adult children to accounts or titles.
So, that’s who might sue you. Now you need to understand what assets they might be able to get.
Protected vs. Unprotected Assets
Under state law, certain assets are not available to a plaintiff to satisfy a legal judgment against you. In general, the state allows you to keep the things you need to get by. Your primary residence, one car, retirement savings, furnishings, and personal items would not have to be liquidated to pay off a lawsuit. However, almost every other asset you might have—including checking and savings accounts, stocks, CDs, investment properties, and land holdings—could be vulnerable to a lawsuit unless you do something proactively to protect them.
Ways to Make Assets Judgment-Proof
Because everyone’s situation is unique, it is important that you talk to a professional about the best way for you to protect your assets. Generally speaking, however, there are a couple of options for safeguarding what you own:
- Insurance. Make sure you have adequate liability insurance on your vehicle and on any rental properties you have. You might also consider purchasing an umbrella policy in case you are sued, and the damages exceed your coverage.
- Corporate entities. If you have farmland, timberland, rental properties, a hunting club, or another business-type venture, you should consider forming a Limited Partnership or a Limited Liability Company (LLC) to protect the company’s and your personal assets from litigation.
- Trust. The best way to protect your hard-earned life savings is by setting up a trust. There are a variety of options for trusts, but with smart planning, you can not only shield your assets from a lawsuit, but you can also accomplish other important estate planning goals, such as planning for long-term care and avoiding probate.
The estate planning team at Ross & Shoalmire would be happy to discuss these options for protecting your assets with you.
We Do a Lot More Than Wills!
If you’re like most of our clients when we first meet them, you think all you need is a Will, and your assets will be protected and your heirs provided for. However, there is a lot more to a comprehensive estate plan than just a Will. When you meet with our estate planning team, we will explain all of your options and tell you how best to protect your assets from litigation—and a host of other threats. Fill out the form on this page or call us today.