If someone obtains a judgment against you, he/she can pursue your personal assets to satisfy that judgment. This may include your savings, salary, personal property, jewelry, and even your house.
Lawsuits can come out of nowhere. You get distracted and rear-end the car in front of you. Your rotting tree falls and demolishes someone's Jaguar. Your dog bites the pizza delivery girl, ending her lucrative side job as a hand model. [Fill in the blank with more unexpected and costly misadventures].
To maximize the effectiveness of asset protection, you really need to get things rolling BEFORE you're named in a lawsuit. After a lawsuit has been filed-and especially after a judgment is entered-many conveyances of money or property are considered invalid and can be reversed by a court of law.
In this episode, I will explain five relatively simple steps you can take to protect your assets before you get sued:
Form an asset protection trust
Form a corporation or business entity
Learn and understand your state's real estate protection laws (e.g., homestead exemptions, types of title, etc.)
Increase retirement account contributions (employer-sponsored)
Remember that laws regarding liability and judgment enforcement are largely based on state law and are therefore different in every state. The concepts and principles discussed in this episode are not state-specific and may not apply in your jurisdiction. This episode is not a substitute for the advice and services of an attorney licensed in your state.