What is Judgment Planning & How It Might Help You in the Long Run?
Whether it is due to the nature of a professional role or because of very visible assets, many individuals can find themselves being susceptible to becoming targets of lawsuits that can end in seized assets. The reality is that frivolous lawsuits are growing increasingly popular among Americans, so it is wise for high-risk individuals to invest in judgment planning to protect their assets and have more peace of mind.
This is a basic breakdown of judgment planning and how it can help property owners in the long term.
What Is a Judgment?
A judgment is a decision of the court regarding the rights and liabilities of the parties involved in a particular lawsuit, and it terminates the lawsuit because it resolves all the contested issues. Judgments can manifest as a lien on land, they accrue interest, they can be enforced by execution and they can affect your credit. They are also available as public record, so landlords and creditors often check to see if there are any judgments against a person with whom they plan to do business.
Judgment Planning, Defined
Judgment planning comprises the steps one takes to protect assets, including real estate, in the event of a lawsuit. There is a saying that goes, “The best offense is a good defense,” and it holds true in these situations. Essentially, judgment planning makes it more difficult for creditors to seize your assets in the event of losing a lawsuit or having a judgment entered against you.
Possible Threats to Assets
There are two categories of threats: professional liability and personal liability. Professional liabilities span from trademark infringement lawsuits to incidents that occur on the company’s property. Sexual harassment accusations, professional malpractice, employment discrimination, work vehicle accidents and workers’ compensation incidents all fall under professional liabilities. Even issues that customers experience while on company property can result in the business owner being held liable.
Personal liability threats are related to the asset holder or family members outside of work. For example: divorce, loans (callable loans and mortgages), auto accidents involving someone in the family, accidents or injuries caused by guests of the family home. These can result in lawsuits or asset seizures, such as foreclosures.
Asset Protection Strategies
When it comes to judgment planning, there are plenty of steps one can take to protect their assets. Using business entities and proper insurance is an effective way to separate personal assets from that of the business, and it protects employees and visitors to business property.
Monetary assets can fund retirement accounts, many of which are protected by federal law. Some retirement plans are eligible for unlimited protection with up to $1 million in protection for IRA accounts. There are contribution limits and penalties for early withdrawals, but these accounts are safe bets for extra cash that will not be needed until later in life.
Home equity can also be protected by a homestead exemption or by appropriate titling to real estate. Arizona’s homestead exemption protects up to $150,000 in home equity from creditors. Additionally, homeowners who have multiple names on the home’s title may be able to protect the home.
Find An Experienced Phoenix Real Estate Attorney
If you or your business has become involved in a lawsuit, you want to ensure you have experienced legal representation. The most effective approach in a potential dispute is working with a legal team that can evaluate your potential case and break down the best options for success. MacQueen & Gottlieb has significant experience with resolving legal disputes involving real estate. Contact us today at 602-562-7218 to schedule an initial consultation or make an appointment online.