Is a lawsuit a risk you need to account for in your estate planning? You are the best person to make that decision. But no one disputes we are an extremely litigious society. With a reported 15 million lawsuits filed each year in the United States, it is a risk that must be considered.
So why would you or your family be sued? A car accident is the most common reason. There are between 10 and 13 million car accidents each year, one third of which involve injuries or fatalities (www.census.gov). Insurance should be adequate to address most accidents. But will it be sufficient if someone is seriously injured or killed?
If your child causes a car accident, the insurance company has a duty to defend him or her. But it will cover the damages from the accident only up to the limits of the insurance your child purchased. If this is the minimum amount of insurance required by law, the insurance company has no responsibility to pay more than this limit. What happens if the accident caused much more in damages, injury or death?
Idaho law provides protection for some assets (such as homestead protection up to a certain value and certain retirement accounts). But will that be enough? If you pass away, will the money you left for that child or his/her family go instead to his creditors? Without advance planning, the answer is likely to be “yes.”
We should each take responsibility for our own actions or decisions. But advance planning will allow you to decide now if your estate is going to pay for the “complications of life” your child must face, even if those complications don’t occur until some time in the future. You can ensure that your estate can help provide the necessities of life for your child’s family while still allowing him or her to address the consequences of his or her actions or decisions.
© 2015 Steven J Wright