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 Real Estate Issues Medical injuries, surgeries or unanticipated deaths can seriously affect your personal estate and the assets which you may own or hold. The following discussion will deal with a few common situations, and provide general information on the legal issues which may arise. Losing Your House One of the greatest concerns to a homeowner is the prospect of suffering a debilitating injury, or an accidental death, which is totally unexpected. Several things can happen to endanger your assets: (1) the possibility that you, or your family member may cause serious injury to another person, which is not covered, or not completely covered by insurance; (2) a life-threatening surgery which leaves hundreds of thousand of dollars in medical bills; (3) a fatal accident leaving your family behind without the proper documents to protect your estate from being divided in an undesirable way. In each of these examples, your assets may be in danger of being lost to third parties via the court system. Thus, it is critical to examine how these losses occur and what can be done to protect your assets. Judgments in Excess of Insurance In certain instances, injuries caused by you or a member of your family may result in damage awards, after trial, of amounts in excess of any insurance coverage which you may have to cover such losses. Let's assume that your insurance between your homeowners and your vehicle liability totals $100,000. Assume a judgment against you for $400,000. Can the other party recover the $300,000 from you? In many cases, the answer is yes. The first step is to try to make sure your insurance settles this matter for the $100,000 and that the other party signs a release, releasing you from liability above the policy limits of $100,000. It may be advisable to hire your own personal attorney to deal with the insurance company lawyer [who is supposed to be providing your defense, but in reality represents the insurance company]. Assuming that the $100,000 will not satisfy the other party, let's examine what course of action is available to them to collect either the additional $300,000 or the entire $400,000 from you. First, there must be a judgment against you. Hurting someone seriously does not make them automatically able to take your house or your retirement fund. In most states, any amounts owed by one party to another must be litigated in a court of law, and either through a trial, mediation, arbitration, settlement, or other related legal means, there must be an award against you. This award must be entered against you through a valid court order. The legal nuances of obtaining and resisting an actual judgment are too lengthy to examine here. However, once a person obtains a valid court-ordered or agreed upon judgment, the process known as post-enforcement proceedings can commence. Many people routinely refer to this post-judgment process as the collection process. Using the valid court judgment, certain legal steps can be taken through the court process, to execute upon, attach, or other legal names used to describe the process of finding and seizing, a person's assets. You should know that there are various court protections built into almost every state's post-judgment proceedings to protect citizens from the unlawful seizure of their property. No matter how much money is owed to a person, that person cannot simply take your property without following rigid court proceedings. Some states, such as Texas, even provide that no matter how much is owed, your house cannot be seized and/or sold for most debts [as exceptions are always possible, please consult an attorney.] As a result of these proceedings, you have a lawful right, in many instances, to take steps to avoid judgments. This is an area, however, where, in most states, if your sole intent was to defraud a creditor, your transaction may be reversed by the court. For example, if you received notice of the judgment in our example of $400,000, and you transferred your house to your brother the day after the Notice of Judgment was received to avoid this creditor, a court may find that you executed such a transfer to merely avoid the judgment. The court may order the transfer voided, title returned to you, and the judgment executed thereon. However, if you caused serious injury to a person and you transferred your house to your brother the month after the accident first happened, before you knew what the judgment would be, or whether your insurance would pay, a court might allow this transaction to stand, since it does not appear as if the sole purpose was to avoid a particular judgment. Because the burden of proving intent to defraud a creditor is on the creditor, it is to your advantage to take two types of preventative steps, before it is too late: First, if there has been no accident, review your insurance coverage with an insurance agent and a lawyer to determine what risks are covered and which are not, and the amounts of each. Second, if an accident has happened, you should consult with an attorney immediately to see what steps can be taken to make certain that you do everything possible with respect to protecting your assets well in advance of any verdicts, settlements, payments or judgments. Assuming you took no such steps, the creditor may file certain post-judgment papers requiring that you come to court and disclose the nature of your assets and their location. It is easy to say, "I don't know how much or where they are", and hope to avoid the judgment. But, these proceedings are under oath, and you will, at some point, be required to disclose certain information. Many people who try to "hide" their assets, forget about this part of the process. The problem with those types of answers is if you are not telling the truth, you are essentially lying under oath (perjury) and that may subject you to criminal liability. Once the assets are disclosed, the creditor may commence legal proceedings to attach, execute [legal terms differ by state and by procedure], or basically attempt to seize, these assets. Needless to say, this post-judgment process is not something one ought to be advised to handle without a lawyer. There are many technicalities, which if known by a person, can foil or delay, the collection on a judgment. As you can see, it is much more advisable to plan ahead and to have adequate insurance coverage for any such contingency.
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