How to Protect Personal Assets from Personal Injury Judgments

I received the following question from a friend, and I thought others might be interested in it as well, so I am posting it here on my blog.

QUESTION:

If a husband and wife own 2 cars, and are on the same Auto policy, and the wife has a major accident which leaves a claimant permanently injured… limits are exhausted and the court finds her liable for millions of medical bills..   does either of the scenarios below protect their personal assets any better/differently?

 1.    Husband and wife each own and separately title each vehicle (one in each of their name’s), but are on the same auto policy

 2.    Husband and wife are joint title holders on both the vehicles, on the same policy

I guess what I am ultimately wondering is, if in the accident above, the wife was driving a car only in her name, would the courts not be able to touch their joint assets? What about her husbands separate assets.. even though they are married?

ANSWER:

That is a very difficult question because the analysis in any specific case will be very fact intensive.  However, if the sole concern is to reduce scenarios where the joint assets would be at risk, then my best recommendation would be to title the vehicles individually and only drive the vehicle that is titled in your name.  Then, own all other assets jointly by the entireties.

 

Why does this work?  If you cause an accident and you were driving the car that only you are the title owner of, then you are the only one that can have a judgment against you.  The judgment does not attach to property that is owned "by the entireties" as husband and wife.  The judgment against you also does not attach to property that is owned individually by your spouse.  However, if you are driving the car that your spouse is title owner of, then the judgment would be against both of you (because both the driver and the owner can be sued), and all your jointly owned assets would be at risk.

 

There are several downsides to this strategy including that you might not be married, or you might become divorced or widowed.  As soon as that happens, then any judgment against you would immediately attach to your share of the previously joint property.  Another downside is that you would have to refrain from driving your spouse's car in order for this strategy to work, and that may be inconvenient.  A third downside is that if you passed away, your spouse would have to pay to probate the car to get the title into his name.  It is quite annoying to pay for a probate for just a car when all the rest of the assets were titled jointly and are inherited by operation of law. 

 

The best protection (as I am sure you know) is to get the highest BI/UM limits on your auto insurance policy and then also buy an umbrella liability policy.  People with this sort of comprehensive coverage rarely face having their personal assets at risk.

 

 If you would like to consult with an attorney regarding protecting your personal assets, you can call attorney Zana Dupee at (352) 379-5900.

 

Comments

[James]

Hey,
Thanks! Great post you have written on "How to Protect Personal Assets from Personal Injury Judgments". Really I can say that your post is very informative, I'll come across your blog again when you will update it with new.
Thanks,
James
http://www.jrlaw.org/