Liability and You

Few of us pay much attention to the risks we face in everyday life, especially risks that could cost us money.

Sure, most of us look both ways when we cross the street. We avoid touching the hot stove. Some of us eat right. But what about the things that just “happen?”

I’d like to talk about four types of liability that people don’t think much about.

The first is driving. As long as you're behind the wheel of a vehicle, there's potential liability.

Let’s say you have a wreck. You hit someone and you're at fault. The person you hit sues you, and the court awards them a large judgement. Maybe it’s $5 million. Maybe it’s $10 million. Not long ago, someone in Greene County received $15 million.

Most of us believe it can’t happen to us. But it will happen to some of us. It might happen to you. When it does, will you be ready?

If you think the odds are low, just drive from Athens to Atlanta and look at the billboards. At least half of them are advertisements for plaintiffs' lawyers. If you get into a car wreck and you’re at fault, you may think you’re protected because you have insurance. Let me be clear. You can’t buy enough auto insurance to cover a $10 million judgment; and, if you don’t have enough insurance, they can take everything in your name.

The second type of liability involves rental properties. If you own rentals or hope to be a landlord someday, this section is for you.

Many people buy properties with the intention of renting them out, and they put their own names on the deeds. If somebody were to get hurt on that rental property, the property owner may be at fault. For instance, let's say you own a rental house and the porch collapses while a tenant is sitting on it. The tenant can sue you, the property owner, and win a judgment.

Even if you own just one rental, the risk is there. If you own dozens, like some of my clients, you’re a sitting duck. If someone gets hurt on one of your properties, sues you, and wins a judgment, you could lose ALL of your rental properties to satisfy that judgment (and possibly everything else you own). Even if your rental properties are owned by a Limited Liability Company (LLC), if that LLC isn’t set up properly, you could still lose those properties.

Number three on the list is land. Let’s say you own some land, and someone falls in a hole, breaks their leg and sues you. If that land is in your name, it could be recruited to satisfy a judgment.

People who think I’m exaggerating the risk will often say to me, “Yeah, but they can’t take your home.” Many people think that’s true, but it’s not. Unless you live in Florida, if you’re sued, you can lose your house in the judgment. Most people have no idea.

The fourth type of liability I see every day involves long-term care costs. The latest research says that 70% of people who are over 65 will need long-term care, most likely in a nursing home or memory care facility. On average, that care will be needed for three years, with the bill easily running $100,000 per year. My grandmother lived 15 years in a nursing home. Fortunately, Medicaid paid the bill. But what happens if your spouse is diagnosed with Alzheimer’s disease and needs memory care that costs $100,000 per year, and he lives for 15 years? You may need a calculator for that.

When there’s an unexpected liability, who pays? If you don’t have an asset protection plan, you’ll be the one to foot the bill—with your real estate, your retirement savings, your business, your home, your income. Here’s the good news. You CAN protect your assets from these liabilities. That’s one of the things we do here at Kimbrough Law. If you’re concerned that you might be at risk, we can put your mind at ease. Just give us a call.