Imagine, one year your child wants a pool party to celebrate their birthday. A day of swimming and playing in the water sounds fun and harmless so you agree. The invites sent, every child in the neighborhood eagerly awaits the party. When the day arrives everything seems to be going according to plan. The children are having a blast in the pool and laughter is abounding. You step inside to grab the cake when you hear a crash and the sound of a child crying. Rushing back outside you find a neighbor boy has slipped on the wet concrete and appears to have injured his arm. Concerned, his parents rush him to the hospital where they discover he broke his arm. Within a week, papers are delivered to your door. The boy’s parents have filed a lawsuit against you and are now suing you for medical expenses.
Years ago this scenario would have seemed extreme, but situations like this are occurring more and more often. Asset protection is a bigger concern today than it was in the past. People are more prone to file a lawsuit now than they were before. This has led to almost everything having a warning label for information that can seem like common sense, just in case. However, people still sue others and it can be difficult to protect against such lawsuits.
While difficult to protect your assets from a lawsuit or creditor’s claim it is not impossible. You can make a gift to your children in your Estate Plan. When worded correctly such a gift can protect the assets. Then, they should not be subject to creditors and lawsuits.