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Protecting Your Assets
Insurance Can be Your Best Bet
The best way to protect your assets against you being sued for causing harm by carelessness is to buy insurance policies. In Nevada, state law only requires you to have a small amount of liability insurance on your vehicle which protects you if you are sued if you carelessly hurt someone while driving. I advise paying extra to buy enough insurance so that your liability limit is large compared to your assets.
(Most attorneys who might sue you on the basis that you carelessly injured their client will advise their client to accept an insurance settlement rather than insisting on going after your personal assets as long as the insurance limit of coverage is large compared to your assets.)
If you own a home, your home owner's insurance may cover you for many negligent acts, for example, for injuring another skier if the injury was caused by your carelessness. You can also buy an "umbrella policy" that will extent the liability coverage on your autos and protect you in situations such as the ski accident.
If you run a business, I recommend a business insurance policy. These need not be expensive, depending on the type of business.
If you practice a profession such as accounting, law or medicine, you should have professional liability insurance.
However, insurance does not cover intentional bad acts. If a surgeon carelessly does the wrong operation on you, his or her malpractice insurance will cover the claim. If a surgeon sexually assaults you the malpractice insurance company is off the hook. This is why if two people get into an argument and one person falls down and cracks his skull, the victim's attorney may argue that the knock-down resulted from negligence rather than an intentional push.
What About Trusts and Corporations?
It is a common misconception that it is easy and legal to simply put your assets in a trust and be protected from creditors. It is helpful to consider these 4 concepts:
- If you want to give away to a friend or relative money that you could probably keep and you want that money to be protected from potential creditors of the friend or relative, we can probably make that work, if you don't already have a creditor breathing down your back. The device used is a spendthrift trust. If it is clearly your money that you want to give away and you want to give it to a particular person and not to that person's present or future creditors, the courts generally are okay with that. (We have used the word "probably" and "generally" in this paragraph because we would need to discuss details with you before we could be more definite.) The process of protecting your own money in a trust is much more complicated. See www.probatenevada.net/Pages/spendthriftrusts.aspx.
- If it looks like creditors are going to get your money or property, then it is probably not going to work to try and give it away to friends and relatives, especially close relatives. Your creditors will probably be able to attack the transfer.
- There are some ways you can plan in advance to protect your own money and property from future creditors, but many judges dislike people trying to do this and find ways to side with the creditors.
- However, courts and state legislatures understand that business activity drives the economy and offer limited liability to individuals conducting business activities. In many cases it makes sense to set up a limited liability corporation (LLC) or a series LLC for several related businesses (such as several different rental homes) or another form of a corporation. We refer our clients with real estate matters, business issues, or an interest in setting up an LLC, series LLC or other corporation to:
Jacqueline S. Ackerman
Law Offices of Jacqueline S. Ackerman LLC
2620 Regatta Drive, Suite 102
Las Vegas, NV 89128
For most people engaging in business activity we think that adequate insurance along with exploration of your options for using corporations for protection makes the best sense.