I know, I know. Such a cliché.
We go through life hearing terrible stories about horrific things that happen to other people. Many think, “Well, that’s awful, but it could never happen to me.” After all, you could never do anything bad enough to get sued for so much money that you could lose personal assets like your car or your house.
This is a true story about two really smart, very nice people who thought the same thing… and were wrong.
John and Joan, a married professional couple, were successful enough that they needed to update their wills. As highly skilled professionals, the couple was savvy about their assets, liabilities, and potential tax exposure, and they decided to hire a reasonably-priced trust lawyer to help them implement a new estate plan.
Ever diligent, the trust lawyer asked the couple about whether they had insurance coverage. The couple told him that they both carried high-level malpractice insurance for their respective professions, as well as automobile and home insurance. No one thought to ask “how much” or whether the coverage was adequate. It was just a box to be checked off. In fact, John complained that his insurance agent had been bugging him about buying an umbrella policy. Last year, they even agreed to buy that umbrella policy, but upon reviewing the terms, the couple felt it was too expensive and that they would be “over insured”. They ultimately decided against it.
While their trust lawyer was indeed very good at his job, his experience was limited to drawing up simple wills and trusts, and he could not deliver comprehensive estate planning advice for potential financially ruinous events. It simply was not part of his practice.
Months later, John and Joan were as busy as ever. Their practices were booming and they moved into their dream home. Life was good.
Then the worst happened.
It was a busy Tuesday morning. John was running late to his office and decided to take a short cut around the traffic. He never saw the stop sign. Seconds later, John crashed his car into another. John was fine, but the other driver wasn’t. He died of his injuries. And it was all John’s fault.
It takes a lifetime to create financial security and a split second to lose it all.
Although they had an auto liability policy, it only provided coverage up to $300,000. The victim of John’s car accident was young and had a wrongful death claim worth millions. Their insurance would only cover so much, and so much would not be enough.
Nothing could have prepared John and Joan for what was to come. Nothing, that is, except for better planning.
Hindsight is 20/20. Today, John would gladly pay a higher fee to implement a more comprehensive estate and asset protection plan now that he knows the potential dire consequences of not doing so. Unfortunately, fraudulent transfer laws preclude such planning after the worst case scenario actually happens. John and Joan are sadly forced into the position of potentially having to sell their dream house and cashing in a significant portion of their retirement funds to settle the future wrongful death lawsuit.
They never dreamed it could happen to them. But it did. And it can happen to any of us.
Had John and Joan paid for the “first class” estate plan, they would not have had to change their lifestyle and plans.
First class estate planning services are not cheap, but consider this: Most successful people drive cars that are more expensive than what it costs to protect their entire estate for their whole life. Even better, Uncle Sam can help subsidize the cost through the utilization of the tax code.2 Considering this, coupled with the potential risks of losing it all, an upfront investment in such estate and asset protection planning seems like a bargain.
Take this moment to consider your own situation. Is your estate planning “coach” or “first class?” Or stated another way: Like John and Joan, have you been penny wise and pound foolish?
If your answer is the latter, call us for a consult for a quote to upgrade to a “first class” estate and asset protection plan. Your split-second decision to call us today may save you a lifetime of financial heartache tomorrow.