Let’s face it. The ambulance chasers know which ambulances to chase. In a world where anyone can sue you for anything, the ultrawealthy are susceptible to being the victim of frivolous lawsuits. In this article we’re going to cover some ways to help protect yourself and your family’s wealth from being pillaged in superfluous litigation.

Being known to have high wealth is a risk factor. You are also more vulnerable if you are well known (a celebrity, even a minor one), you throw parties a lot, have a swimming pool, and if you own or rent out property.  The list goes on and on…

Insurance

The first safeguard to put in place is insurance. While nobody likes buying insurance, the reality is that if you need it and don’t have it, you may suffer.

The basic insurance policies you should have are:

• Personal liability coverage
• Homeowners insurance (or renters)
• Watercraft insurance
• Auto insurance

Personal liability coverage, commonly referred to as umbrella insurance, will protect you for amounts in excess of your other coverage limits. Your level of overall insurance needs to match the level of your assets, or you are at risk of losing them.

Umbrella insurance is on the less expensive end of the cost spectrum when it comes to insurance. There is no medical exam required to obtain this. If you don’t have enough coverage, contact your agent and ask about it. If you don’t have an insurance agent who offers coverage to your level of assets, we can make some recommendations.

LLCs

An LLC is a business formation that is regulated by statue statute. It provides you with liability protection from the debts and liabilities that you would incur in the course of doing business, if you are business owner.

In other words, the debts and liabilities that present themselves to you as a business can not be held against your personal assets to the limits that your state dictates.

Family partnerships

A family partnership can be used if you are doing business with your family members. It may also be referred to as a “Family Limited Liability Company.” In this type of structure, assets are placed into the partnership and a minority interest is given to other family members. The assets within the family partnership are protected to a higher extent than if they were owned outright by the family.

Risks can be indirect

Often times people overlook the risk of the behavior of family members. Children often put their wealthy parents at risk. For example, an accident in a vehicle or boat that causes harm or damages to others can pose a threat to the balance sheet of the owner – even if they weren’t directly involved. Many of the strategies we’ve already mentioned – umbrella insurance, owning assets in an LLC, etc. – are the best means of protection in a scenario like that.

Concluding thoughts…

It’s a jungle out there and high net worth folks are often preyed upon. If you think you may be at risk and have questions about how to protect yourself or your family, please reach out to schedule a time to talk.

Sources

Denha, Randall. Have You Considered A Family Partnership? Denha & Associates, PLLC. https://denhalaw.com/have-you-considered-a-family-partnership/#

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