Creditor claims in Florida

Attorney Chris Merrill: When we talk about creditors, I think it is two different distinct, if you will, creditors. One is where people, exactly like you were saying, Tom, and describing, creditors where you're concerned, what if I get in a car accident? That type of thing. The what ifs. Or, again, somebody gets hurt on my property and you're concerned. That is absolutely number one best defense is be well insured. Have an umbrella policy. Go over that with your insurance agent. That's that grouping.

Another, though, is where people know they are being sued for a particular situation, or, again, there's a judgment against them. This is where they have a false sense, "Let me quick put everything into a trust." That does not work because exactly like you said, Tom, anything that they can get to you without, they can get to you with. We do, I know Lane is asking, and hopefully, between the two of us, we're helping Lane to understand, but I do have to say that I receive this call pretty common. You too, as in, they think they want to set up a trust to protect them from creditors. That is not accurate.

Attorney Tom Olsen: [unintelligible 00:01:23]. People are using trust for the purpose of avoiding probate. Now, if somebody came to me last week and said, "Tom, I want to put this piece of property in a trust so that if somebody looked into public records, they wouldn't find my name." I said, "The problem with that is that when you do a deed to that trust, your name is going to be on there, not as an individual, but as trustee, they're going to find it anyway."

Chris: Exactly.

Tom: They said, "Okay, look, couldn't I put in the name of the deed, and you as trustee or a friend as trustee?" I said, "Well, you better trust that person because for all intents and purposes, they own this piece of property,-"

Chris: Not you.

Tom: "-and if they want to sell it out from under you, they can. Let's say they got by that and said, "You know, Tom, I'm going to take that risk. I'm going to put it in my son's name so they don't see my name in the public records." Remember, if somebody sues you, and they get a judgment against you, they're going to take a deposition in aid of execution. They're going to have a two-page list of everything you need to bring with you to that deposition, including tax returns and copies of leases and copies of trust where you're a beneficiary. Believe me, it's extensive.

Chris: Absolutely.

Tom: Even if your name's not in the public records, if you're a beneficiary of a trust, you're going to have to bring a copy of that trust, they're going to see you're a beneficiary, now they're going after you.

Chris: Exactly. In other words, it does not shield it. People think that a trust will shield them, and that is not accurate.

Tom: Then you'll have the police person talk to us, and it'd be, "What if, but what if, but what if?" I get back to it, "Look, folks, if you've accumulated wealth, good for you. We're happy for you. Your best defense is to be well insured, having lots of good insurance, and having, on top of that, an umbrella policy for $1 million, $2 million, $3 million." You can get a $1 million umbrella policy for a million of $500 a year, 2 million for $700 a year, 3 million for $900 a year.

Chris: Exactly.

Tom: It's not that expensive, and it, boy, it will make you sleep better at night, knowing that you're protected.

Chris: Correct. Exactly what you said, Tom, that we want to educate people. We want to let you know, listeners, that it is very important. You have to consult an attorney if you're not sure, but it is not about going to Google on this and thinking that, "Oh,--" because the other thing that happens is then people think when they go to Google, they then do their own trust, and they pull the things from the internet, and then they think, 'I'm protected.'" I reviewed one this week where the people had all the documents in the thing, they wanted me to review the trust, they never signed it. Lord, all those regular, they absolutely thought that everything was good.

Tom: You know, that's right up there with people, they come to us and we're going to do their estate planning. Step number one is we gather information from them so we can prepare drafts. I'm always a bit surprised that they might say, "Okay, Tom, if we get killed in a car wreck on the way out of here, we're covered, aren't we?" "No,-

Chris: No.

Tom: -not until you've signed the documents. Just giving us the information is not good enough."

Chris: It doesn't cover it.

Tom: It's been a while, Chrissy, but there used to be a lot of sales pitches and people come to ballrooms about how you can protect your assets from creditor claims, and you need to set up a Wyoming LLC and [unintelligible 00:05:03] this LLC, and you want this LLC. You're all protected. It's just a sales technique because, once again, if you get sued and they're trying to collect money from you, believe me, you're going to have to show every piece of paper that has anything that has to do with any asset that you might own, and they're going to find it, and they're going to go after it.

Chris: I agree. This is why I think that we want to educate people, just like we're doing now. We hope that just this little conversation that we're having is helping listeners out there, in addition to Lane, that we hope it's helping others because it really gives you at least a basic overview and why you want certain things and why other things that you have a perception, for example, that a trust will automatically shield from creditors is false.

Tom: Let's talk about a couple of things that people might do, and this is that, remember, if you're a married couple and somebody sues just the wife, they can't touch anything that's owned by the couple. If somebody sues just the husband, they can't touch anything that's owned by the couple. The only way they can go after marital assets is somehow, they're managed to sue both of the husband and wife. For that reason, often, the husband will take the car that he drives mostly and put it in his name only. She'll take the car that she drives mostly and put it in her name only. If they do get sued over a car wreck, they're only suing one of the spouses. They can't go after the assets that are owned by both of the spouses.

Chris: Exactly. That's a great point. Thank you for that.

Tom: Then if you've got a young driver in your household, you better have good insurance, but think about possibly taking your young driver, your 18-year-old, 22-year-old, 24-year-old, and don't put their car and their name and your names, because again, if they get in a car wreck, the people that your child hurts can sue both the driver, so child, and the owners, you; so put that car in your child's name only.

Chris: Exactly.

Tom: Hey, folks, my name is Tom Olsen. The name of the show is Olsen on Law. You're listening to WDBO. We're going to take a break. We'll be back in just a few minutes.

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