How do I go about protecting my assets?

Question

We let a needy family move in with us, and the daughter severely broke her arm (because her mother was not watching her) and may have sustained permanent damage. No lawsuit has been filed yet, but if I put my home and car in my parents name would it protect my assets in case of a future lawsuit?

Paul Whitfield · Answer

Probably but why would there be a problem unless you caused the damage?

Andrew Velonis · Answer

Report this to your homeowner's insurance company.

Rex K. Daines · Answer

No. In fact the opposite is true. If you transfer property out of your name in the face of a potential lawsuit, someone who sues you can still take the property and you will lose any exemption (like a homestead exemption) that you had.

Ronald A. Steinberg · Answer

No, because you made the move "in anticipation of suit." That is illegally attempting to hide assets, to hinder, defraud or delay creditors. Why did the kid break her arm? If the mom was living in your house long enough to be aware of all the oddities of your house, then she would be responsible for her child. The only time you can be liable is if only you are aware of the defect and you do not warn.

Georges Shers · Answer

On the very limited fact you mention, there does not appear to be any liability. In order for you to be liable you must have been negligent; so if she fell down because she took a misstep and was off balance, you have no legal responsibility. If you have homeowners insurance it should take care of the problem and they would hire an attorney at their expense to represent you. If you transfer assets clearly to avoid having to pay, the transfer can be nullified. There are all sorts of tax consequences if you transfer any of your assets. It would be best to go to an attorney who handled personal injury cases, tell them all the facts of the incident, and see whether they think you might have any liability.

Michael Yurasov-Lichtenberg · Answer

Putting your car and house in your parents' name would not protect your assets: the court will see it for what it is and disregard it as a fraudulent transfer.  Another reason this transfer would make no sense is the nature of the potential claim. The only claim this family can make against you would be under the "premises liability" theory. Without more information, I cannot discuss the prospects of their success on such a claim. Nevertheless, it is clear that a) the claim would be made against whoever would be considered the rightful owner of the premises, and b) the damages should be covered by the homeowner's insurance. Therefore, changing the name on the title to the property would not affect the outcome of the lawsuit even if the transfer would be recognized as a valid one.

Gregory Janks · Answer

If you have homeowner's insurance, then it should cover any  premises liability claims. Keep in mind the mere happening of an injury  doesn't a valid claim make. An injured person must show that the  negligence of a premises owner caused/contributed to an injury. Further,  in Michigan, if a premises defect is open and obvious, there is no duty  to make it safe (unless a statutory duty can be found). So it is likely  that a case may be tough to bring/win, and that your insurer would  provide a defense and payment of any within limits claim. Thus it would  seem that there is no need to transfer assets. Note that there are  sometimes ways that asset transfers can be voided/reversed if done for  improper/fraudulent purposes, so you'd want legal advice before making  any transfer. There is also the ownership of the home/assets to consider  to determine who any possible claims would be against and whose assets  would be at risk.

Mark T. Peters · Answer

Nope.  It is too late.  What you are attempting to do is called a fraudulent conveyance and the court will disregard the transfers.  Hopefully you have homeowner's insurance which may help.  Also, if the child was hurt do to her negligence or her parents' negligence and not as a result of a defect in your premises, it may be very difficult to win a lawsuit against you.

Wayne Wimer · Answer

You need to exercise extreme caution in moving your assets into someone else's name (for a lot of reasons).  If the motivating factor is to put your assets out of reach of creditors, then there is an attendant risk that a court would deem the transaction to be a fraudulent transfer, and enter an order setting aside the transfer as though it never happened.

Willie Stephen Graves · Answer

If you're in Texas, your house and your car are exempt from seizure to satisfy any judgment that might ever be entered against you.? Plus, you're only liable for the child's injury if you were negligent, not just because she was in your house when she was hurt.

Thomas Edward Gates · Answer

To late, you need to have made the transfer before the accident.  All is not lost however, if you can show that you were not negligent or had no duty to the child, then you will not have liability.

Mark Leonardo · Answer

If you transfer assets to avoid creditors it?s considered a fraudulent conveyance and could be set aside.  Do you not have homeowner?s insurance?  This is precisely the type of incident that homeowner?s insurance would cover.

Erven Nelson · Answer

If you are in Nevada, there are a number of things you can do to protect your assets by placing them in exempt categories such as up to $550,000 in equity in your home, $500,000 in qualified retirement accounts, unlimited amounts in insurance policies, etc.  You could also place money into a Nevada Asset Protection Trust, and in limited liability companies and limited partnerships, depending on the timing of any claims made.

Edwin K. Niles · Answer

Were you negligent in some way?  If not, relax. If you were at fault, check your homeowner?s policy to see if you have liability coverage. We do not recommend the transfer; it?s too transparent.

William Andrews · Answer

No.  The fact that the injured daughter broke her arm in your house gives rise to a cause of action against you, and more specifically, a claim against your home insurance.

John Brennan · Answer

Perhaps, but you should see an attorney and also make sure you have a good liability policy.

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