Protect Your Assets and Your Financial Future

It’s been said that, in this litigious society we live in, it’s better to be rich and guilty than poor and innocent. Justice, and access to the legal system, seem to be reserved only for the wealthy. So what are the ‘little people’ supposed to do? What about us ‘average Joe’s’? We have legal concerns, too, and because we’re not among the wealthy, one lawsuit could wipe us out financially. Can we protect our relatively meager assets the way the rich do and still afford to eat?

Actually, there are a number of things the average, middle-class American can do to protect what they’ve worked so hard for. Because our homes are usually our largest assets, we’ll start with that. If you have your home mortgaged to the hilt, you’ve actually ‘protected’ it in one way. Yet, if you’re among those who feel most secure by having a paid-for home, you’re more vulnerable than you think. Sounds counter to logic, doesn’t it? Let me explain.

If someone wanted to sue you—over an auto accident, for instance—the first thing they or their attorney will do is try to find out if you’re worth suing. How do they do that? The amount of information about you in the public records is enough for anyone to get a pretty fair idea of what you’re worth financially. However, when they see that your home is mortgaged for very nearly what it’s worth (or in some cases even more than it’s worth), yours doesn’t look like a very profitable lawsuit. On the other hand, if no mortgages are recorded in the public record on your home, all that equity looks mighty tempting to the attorney who’s about to take the case. It’s all at risk.

To protect your paid-for, or nearly paid-for, home, probably the wisest thing to do to protect your equity is to mortgage your house so it looks as though you have no equity at all. Now, you don’t have to put a traditional mortgage on your home and start making those big payments you were so happy to get rid of when you paid off the loan. Instead, apply for the largest home equity line of credit (HELOC) you can get. Equity lines of credit offer the lowest interest rates around these days, and some lenders will allow you to apply for 100% of your home’s value—and the best part is that you don’t pay if you don’t use it. Your lender may require you to take out a certain amount of the available total when you go to closing, but there usually is no penalty for paying it all back immediately, while leaving the entire line of credit open for future use.

How does this protect your home? Lines of credit such as this are recorded in the public records as mortgages (there is no notation indicating that it’s a line of credit so it appears the same as a first mortgage would), and the ‘balance’ is simply the maximum available credit you have access to. The balance you have outstanding on the loan (how much of your equity you’re actually using) is not recorded publicly. So, to the person searching the public records, it looks as though you’re mortgaged to the hilt and have no equity to take in a lawsuit. Quite often, they won’t pursue the lawsuit any further because no ambulance-chasing attorney will take a case on contingency that doesn’t look like it will have a big payout. What a HELOC offers in addition to providing some level of protection for your home from lawsuits, is that you now have all that equity at your disposal with the simple act of writing a check—to pay for home improvements, for college, or to tide your family over through a period of unemployment or even disability.

The next step toward protecting your finances is to consider adding an umbrella liability policy onto your homeowner’s insurance policy. Liability insurance is about the cheapest insurance you can buy, in some cases costing less than $20 a month for a million-dollar policy. This policy would kick in after the liability coverage on your home or cars has been exhausted in a judgment against you, allowing the lawsuit to be settled without you having to sell any assets. Ask the agent who handles your home and car insurance, and don’t hesitate to shop around for a terrific ‘package deal’ including your home, cars, and liability umbrella all with one company.

So what if your local drycleaner ruins your favorite suit and won’t pony up for the damage? Would you even consider calling an attorney to see if you have any recourse? Most people won’t call an attorney, even when they need one, because the cost of the attorney is more than what the situation is costing them. And what if you’re involved in, say, a relatively minor car accident, and you get sued by the other driver? Now what do you do? You definitely need an attorney now, but do you know who you would call?

The wealthy seem to have entire law firms at their beck and call, but few Americans seem to be aware that there is help for them…if they’re willing to give up pizza night once a month. A thirty-plus-year-old, New York Stock Exchange-traded company called PrePaid Legal Services, Inc. does just that. They offer virtually limitless access to legal advice and representation starting at an astoundingly-low monthly cost. And these are highly-rated law firms, not rinky-dink operations. See http://www.WeAllHaveRights.com for more information about what’s available in your state.

When thinking about protecting our families and our assets, having an attorney ready and willing to answer our questions is a powerful thing to have. And to be able to access that legal advice without having to first weigh the cost is simply empowering. So, there it is in a nutshell: you, your family, and your assets don’t have to be vulnerable any more, and it won’t cost an arm and a leg to protect them. You just need to know the strategies to use and the affordable resources available to you. I encourage you to take a look at your own situation and protect what you have right now.

Kathryn Marion is president of Education for RealityTM, as well as an author, researcher, and Independent Associate for PrePaid Legal Services, Inc. For information on legal plans, visit http://www.WeAllHaveRights.com. Also visit http://www.EducationForReality.com for information about career and life skills resources for students and graduates.

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