It’s no secret that lawsuits are an ever-present threat in the United States. They can strike from any direction and send your life careening off-course if you don’t see them coming.
To ensure that you’re never caught off guard by a claim against you, we’ve put together this list of common causes of lawsuits.
Personal Liability Threats
There are generally two major categories of threats to your assets: personal and professional. Personal liabilities stem from your actions as a private citizen, while professional ones relate to your company or occupation.
Some of the most common causes of lawsuits that result in personal liability include:
- Automobile Accidents: Car crashes can quickly spark a lawsuit that spirals out of control. If you get into a crash and someone gets hurt, they have the right to file a personal injury claim against you. Accidents resulting in catastrophic injuries, multiple parties, and commercial policies often exceed the policy limits. These claims often turn routine accidents into massive settlements that can bankrupt you if you lack an asset protection strategy.
- Callable Loans:If your lender demands a full loan repayment and you fail to deliver the funds, your lender can take you to court. Should you lose the case, you may have to pay the whole loan and legal fees.
- Debt: You can be sued if you default on your debts. In this scenario, lenders have the right to collect on a portion of the debt and can sue to ensure they get paid.
- Divorce: Divorce is a leading cause of lawsuits in the United States. Even if you signed a prenuptial agreement, your ex-spouse can challenge the terms of the agreement and likely nullify it. Once it’s nullified, virtually all of your assets are at risk. An aggressive judge can split up everything, from your investments to your businesses.
- Social Host Liability: When you host a gathering at your home, you’re responsible for your guests’ safety. If your property is poorly maintained or otherwise unsafe and someone is injured as a result, they can sue you for failing to create a safe environment.
- Vicarious Liability: Employers and parents are always at risk of being sued because of someone else’s actions. For example, if your child injures someone while street racing your vehicle, you can be held liable.
- Dog Bites and Animal Attacks: If your pet injures someone, even on your own property, you could be held legally responsible. Certain breeds are considered high-risk and can lead to costly settlements.
- Defamation (Libel and Slander): Saying or publishing something false and damaging about someone else—even on social media—can land you in court. Defamation lawsuits are growing rapidly in the digital age.
- Negligent Supervision: If someone is injured due to your failure to supervise a minor, guest, or employee appropriately, you may be legally liable.
- Homeowner Negligence: Failing to maintain safe conditions at your home can lead to expensive premises liability lawsuits.
Professional Liability Threats
Lawsuits that lead to professional liability always start in the workplace. They can be filed by aggrieved customers, business partners, and even medical patients. Unfortunately, these lawsuits don’t always stay contained to the professional realm. Liabilities incurred from a professional lawsuit can drain your personal bank account if you don’t have an asset protection plan.
Some typical reasons for a lawsuit in the professional world include:
- Breach of Contract Claims: The law can generally hold you responsible if you do not keep your end of a contract. Plus, there’s a high likelihood that the other contracted party will take you to court over the breach.
- Employment Discrimination: A former or prospective employee can hit you with a discrimination lawsuit. For example, you can be sued for inquiring about a potential employee’s pregnancy.
- Employee Actions: Employers are responsible for their employees’ actions. For example, if your employee assaults someone out of frustration, the victim can sue your company.
- Faulty Goods: Businesses are responsible for putting out safe products. When your goods injure someone, a lawsuit is likely just around the corner.
- Malpractice Claims: Patients and clients commonly bring lawsuits against medical doctors, accountants, and attorneys. Unfortunately, these lawsuits are costly and not always covered by employer insurance. Should a lawsuit exceed your malpractice coverage, your personal assets could be on the line.
- Sexual Harassment Accusations: Even if you think a remark or act was harmless, it doesn’t mean the accuser will not bring you to trial.
- “Slip and Fall” Accidents: Customers who are hurt while tripping or slipping at a place of business regularly bring lawsuits against the business owner.
- Trademark Infringement: Using a trademarked name can lead to a lawsuit, even if you used it unintentionally or didn’t know it was trademarked.
- Workers’ Compensation Incidents: Most states require you to pay workers’ compensation to injured employees. Unfortunately, the cost of this compensation can outstrip your workers’ compensation insurance. When that happens, you’ll have to pay out of pocket.
- Cybersecurity and Data Breaches: Businesses of all sizes are increasingly sued for failing to safeguard customer data. A single breach can trigger lawsuits from customers, regulators, and even business partners.
- Failure to Warn or Misleading Information: If your product or service doesn’t include adequate warnings, or if it misleads customers in advertising or labeling, you could face serious legal consequences.
- Wrongful Termination Claims: If a former employee believes they were fired unfairly, they may sue for wrongful termination. These suits can be extremely expensive, even if you acted lawfully.
- Breach of Fiduciary Duty: Business partners and directors can be sued for making decisions that violate their duty to act in the best interests of shareholders or clients.
How to Keep Yourself Safe from Lawsuits
Unfortunately, you cannot create a foolproof strategy to avoid lawsuits. You can, however, plan for what happens if you lose one. To keep your wealth safe, you need an asset protection strategy. These strategies utilize tools like asset protection trusts and LLCs to make it impossible for creditors to get your money.
Our team at Asset Protection Planners knows exactly how to set up these strategies to ensure no lawsuit can touch you. No matter which assets you want to defend from judgment creditors, we’ve got a solution in mind!
Schedule your free consultation today to learn how we can keep your wealth safe!
