Your home is likely to be one of your most important assets. It’s not only the value of it but the security it provides for your family. While you may do your best to safeguard your home from theft and more, many homeowners overlook the likelihood of a lawsuit. It’s a reality that many families do not have the cash to handle a large lawsuit, defend themselves, and satisfy a large judgment. A lawsuit is a huge financial obligation and can put a real strain on your pocket. To help you protect yourself and your property from a lawsuit, read on.
Create a domestic asset protection trust (DAPT)
A DAPT is a self-settled trust created under certain state statutes that offers another method for homeowners to protect their properties. The DAPT is excellent for protecting a personal residence, cabin, or beach house that you plan on keeping for life. In most states, the longer you keep the assets in a DAPT, the better protection the trust provides.
Implement an equity stripping plan
Equity stripping is the process of placing a lien on your home with a mortgage and removing the equity by replacing it with a loan. In short, this makes your home much less attractive to a potential creditor who wants to take it to satisfy a judgment. It’s essential to implement the loan correctly. Ideally, a traditional home equity line of credit or even a first mortgage lien, wherein you use the loan proceeds to invest and create additional wealth, can be a perfect fit. It’s legitimate, and it’s difficult for a creditor to challenge in court and step in front of a valid lien holder on the title to your primary residence.
Purchase umbrella insurance
Umbrella insurance is a coverage that helps you when you need help the most. It extends beyond your current homeowners insurance liability coverage. It is an insurance that covers a variety of situations that could possibly create a claim. It can be very affordable and will benefit many families. If someone files a lawsuit against you, your homeowners insurance may step in to help – but only up to the policy limits. If the lawsuit is so expensive that it costs more than what you have coverage for, then an umbrella insurance policy will step in to help. Most policies start at $1 million in coverage, which gives you ample peace of mind that you have cover in place to protect your home.
Now you know just some of the ways to protect your home from a lawsuit. Are you ready to find the right protection? Talk to the professional team at Chambers & Company Insurance Brokers to determine the right homeowners insurance policy or umbrella insurance policy to suit your needs and home from a lawsuit.