By all odds, unfavorable situations can occur to all people, good and bad. When it comes to lawsuits, you do not have to be negligent or irresponsible to be in one. To protect your wealth, it is very important to take some defensive measures to make it more difficult for the opposing party to take what you have away from you in the event you lose a case, even forcing you into bankruptcy. Here are some tips that you should consider:
Take out liability insurance.
If your business or profession generates exposure to liability or lawsuits for malpractice, such as financial consulting, real estate and medicine, you should keep your omissions and errors coverage paid up. This means that you should invest in insurance policy that offers expanded or extra coverage.
Take advantage of business entities.
It is vital to separate your personal assets from your business assets. The failure to take legal steps to create a separate business entity, such as a limited partnership, limited liability company (LLC) or a corporation, would make a simple business dispute to cost you your wealth.
Assess your home titling.
If you and your spouse own your house through tenancy by the entirety, both of you own an indivisible interest in the property, which means that if only one of you is named in a lawsuit, creditors will not be able to force the other to sell his/her interest in the house. Because of this, you can protect your home equity, especially when your state does not offer sufficient homestead exemption.
Get a homestead exemption.
Some states offer certain means of protecting home equity, which means that if you are in the brink of declaring bankruptcy, the law will prohibit courts from awarding home equity to creditors.
Do not wait until a lawsuit is imminent before you take these measures. If you do, the court could rule that your fund transfers into a protected class is a fraudulent act and would not allow the transfers, which will leave your assets exposed.