How Car Accidents Could Affect Estate Planning
With the change of seasons comes a change in North American driving conditions. If you travel this Thanksgiving, you might encounter slippery roads, rain, snow, and/or less sunlight on the road. Unfortunately, these hazards increase the likelihood of car accidents. However, few consider what to do estate planning wise, after facing a fender bender.
No two car accidents are identical. However, certain estate planning rules apply after an accident
Check yourself and your passengers for any injuries.
Next, check everyone remains safe and uninjured. Also, make sure you avoid the risk of further danger from nearby traffic. Find a safe location to relocate involved vehicles.
Even when accidents result in only minor damage, ask local police to respond before the other driver leaves the scene.
Then, contact your car insurance company as soon as possible.
Finally, after you leave the scene of the accident, consider how the accident could potentially impact your estate planning.
How Car Accidents Impact Estate Planning
Healthcare decision-making
If an accident renders you unable to speak or make decisions for yourself, ask someone to speak on your behalf to doctors and medical providers. A Medical Power of Attorney (POA) allows someone to speak for you and arrange for treatment until you regain consciousness. Without a Medical POA, decision-making becomes unclear and could result in medical treatment delays. Therefore, put a Medical POA in place. Also, inform those closest to you about where to obtain a copy of the POA.
Insurance coverage
People fail to realize that carrying adequate insurance coverage effectively protects them from lawsuits that could place their savings and property at risk. Make sure you carry adequate car insurance. This simply wards off lawsuits. Beyond increasing limits on your car insurance, discuss the possibility of securing an umbrella policy. These act as a form of backup insurance to your car insurance policy.
Car Accident Limits
Essentially, after a car accident, damages could exceed the limits of your car insurance policy. Thus, an umbrella policy covers excess liability. With both policies in place, you provide a large pool of insurance money. This provides your insurance company with the ability to settle any lawsuit.
Estate Planning Considerations
As part of your estate planning, meet with your insurance advisor. Discuss the limits of your car insurance and umbrella policies. Also, find out about the types of protections they provide. Adequate insurance goes a long way toward protecting your accounts and property from loss resulting from car accidents.
Beware of Fraudulent Transfers
After a car accident, significant property damages and medical injuries may ensue. In such a case, you may take steps to protect what you own. This could guard against a lawsuit resulting from the accident. However, resist the temptation to begin transferring your property and accounts to friends or family to hide assets. In many states, taking such steps is considered a fraudulent transfer. The court doe not ignore these.
No, Revocable Trusts Do Not Protect Property from Lawsuits
Another very common misconception is that if you create a revocable living trust for estate planning purposes, you have also protected your assets from lawsuits and creditors. Unfortunately, this is simply not the case. While it is possible to design a revocable living trust that will protect your assets after you have died from the creditors and lawsuits of your named beneficiaries of your trust (usually your loved ones), revocable trusts in general offer no protection against your own creditors or lawsuits filed against you. This is because you have complete control over the property placed in your revocable trust. And because you retain the power to revoke the trust, a judge can order you to revoke the trust and use the trust property to pay your creditors and lawsuit judgements.
That being said, there are certain types of irrevocable trusts and other asset protection strategies that, if designed properly, can greatly enhance the level of protection you can obtain for your property. However, you should explore these with the assistance of an experienced asset protection and estate planning attorney to ensure proper creation and implementation.
When it comes to protecting your accounts and property, the time for taking the necessary steps is well before an accident occurs. Doing so will help you maximize the amount of asset protection that is available to you through purchasing insurance or designing estate planning features that have a much better chance of warding off successful lawsuits in the event of an accident.
Car Accident Estate Planning Tips
We hope that we have given you some things to consider and encouraged you to revisit some aspects of your estate planning. Protecting your hard-earned accounts and property is a worthwhile investment of time and effort. But remember, the time to do so is before an accident occurs. If you are not sure where to start, give us a call. We would be happy to help you take the next step in preparing for the perils that winter can bring.
About Skvarna Law in Glendora & Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. Also, we provide legal services. We cover San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes several cities. Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma.
