Asset protection: equity stripping?

[Spock]

My 80-something year old dad is starting to make some poor choices... like driving while on opiates after joint surgery.
All the professionals (social workers at the hospital and rehab center) say there is nothing I can do, he scores too high on the mental capacity tests. Every one of the pros say that I "just have to wait until a big event happens and just hope nobody gets killed".

The atty mentioned "equity stripping" his real estate holdings to protect his assets.
He would take out lien generating loans on the properties
but doesn't that just put cash in his pocket which still vulnerable?
How are the loan proceeds protected

 

[OldShooter]

IANAL, just SGOTI, but it doesn't make sense to me. If he borrows against the properties and keeps the loan proceeds nothing has really changed other than his net assets are reduced by the cost of getting the loans and by the difference between the loan interest payments and whatever he earns on the money.

To protect his assets from a lawsuit he would have to give the loan proceeds to someone else or, possibly, put them into an irrev trust. & I am not at all sure about the trust.

If this lawyer didn't and can't explain this idea to you in full and understandable detail, you need another lawyer.

 

[RunningBum]

Can he still get an umbrella policy? A lawsuit may go for more than the policy limits, but at least he'll have their lawyers on his side.

 

[CaliKid]

I think the theory is it makes him look poor and some (lazy) plaintiff's attorneys might not sue him.

 

[marko]

A bit late in the game but how about a sit-down with dad and say "Ok, you're getting on is age...how about we start moving some of your assets; you would still have control over them (unofficially) but not legal responsibility"?

My mom has assets that are not in her name but she maintains 'control' of them via mutual understanding within the family that it remains 'her' assets until she's no longer with us.

 

[marko]

If this lawyer didn't and can't explain this idea to you in full and understandable detail, you need another lawyer.

+1 You need to find a better lawyer.

 

[meierlde]

My 80-something year old dad is starting to make some poor choices... like driving while on opiates after joint surgery.
All the professionals (social workers at the hospital and rehab center) say there is nothing I can do, he scores too high on the mental capacity tests. Every one of the pros say that I "just have to wait until a big event happens and just hope nobody gets killed".

The atty mentioned "equity stripping" his real estate holdings to protect his assets.
He would take out lien generating loans on the properties
but doesn't that just put cash in his pocket which still vulnerable?
How are the loan proceeds protected

Note that in most states 401k and iras are protected plus some amount of home equity.(depend on state)

 

[Human]

+1 on considering an umbrella policy. This is what I did for my parents, in a similar situation. However, I’m not an expert in this area.

 

[OldShooter]

A bit late in the game but how about a sit-down with dad and say "Ok, you're getting on is age...how about we start moving some of your assets; you would still have control over them (unofficially) but not legal responsibility"?

My mom has assets that are not in her name but she maintains 'control' of them via mutual understanding within the family that it remains 'her' assets until she's no longer with us.

Be very careful with this. If she gives an asset to someone who would otherwise be an heir, the heir loses the asset value step-up at death. Consult a good estate attorney before shuffling assets. DW, as an SVP in investments and trusts at a major bank saw this expensive mistake made frequently. Usually it involved Mom giving her house to one of the kids, at which point the kid also gets Mom's basis in the house.

 

[Gumby]

Shouldn't his assets be available to pay the victims when he is found liable for negligence after a wreck?

 

[Dash man]

Ask him how he’d feel if he killed someone, especially a child. I take opiates for spinal problems as needed, but would never drive because I couldn’t live with myself if something happened. You could also play hardball and call his insurance company or the motor vehicle department where he might lose his insurance or license. Or talk to his doctor who might stop the prescription.

 

[gauss]

Lots of discussion including the pros and cons of harassing elderly parents who continue to drive over at this recent thread:
my-sister-in-law-is-missing-again
-gauss

 

[CaliKid]

Shouldn't his assets be available to pay the victims when he is found liable for negligence after a wreck?

Well said. The theory always told to me when people are trying to work the system is "he worked really hard for that money so he wants to save it." I would then do a silent eye roll.

 

[Lakewood90712]

My 80-something year old dad is starting to make some poor choices... like driving while on opiates after joint surgery.
All the professionals (social workers at the hospital and rehab center) say there is nothing I can do, he scores too high on the mental capacity tests. Every one of the pros say that I "just have to wait until a big event happens and just hope nobody gets killed".

The atty mentioned "equity stripping" his real estate holdings to protect his assets.
He would take out lien generating loans on the properties
but doesn't that just put cash in his pocket which still vulnerable?
How are the loan proceeds protected

I feel your pain, or did about 12 years ago with my dad. He finally had his licence revoked by the DMV after a traffic stop . (slow speed chase, 4 cop cars boxed him in, the station called and said," come pick up your dad and his car." " By the way, he can try to get his lic. back from the California DMV". He tried 3 times.
.

Uber and Lyft didn't exist back then so it was very hard loosing his mobility before he became wheelchair bound.

Back to the original question, Not an atty , read my signature line . but trying to hide assets just will not work IMO. I urge you to get a second legal opinion.

Oh by the way, plaintiffs attys , and prosecutors routinely have paralegals search social media, including sites like this one to connect the dots if chasing a large issue !

Sorry

 

[ExFlyBoy5]

Shouldn't his assets be available to pay the victims when he is found liable for negligence after a wreck?

This. X1000.

The attorney who suggested the lien stripping is the kind that give the good ones a bad name.

 

[marko]

Be very careful with this. If she gives an asset to someone who would otherwise be an heir, the heir loses the asset value step-up at death. Consult a good estate attorney before shuffling assets. DW, as an SVP in investments and trusts at a major bank saw this expensive mistake made frequently. Usually it involved Mom giving her house to one of the kids, at which point the kid also gets Mom's basis in the house.

Appreciated, but we have good lawyers.

 

[Spock]

This isn't a matter of the lawyer not explaining equity stripping.
The appt was for drawing up a POA. At the close of the appt, the lawyer gave out suggestions to be researched (homework) before the next appt instead of burning his hourly fees.

As far as "his assets should be available to pay his victims", he has higher liability limits on his car and an umbrella policy that can pay his victims. (assuming he keeps paying the premiums, he's already tried to cancel his LTC because it was "getting too expensive")

Now days they look at the assets available to size their claims, not the actual injury. Having more insurance is just an addition to your assets to make a claim against. As others have stated, the only value of the umbrella insurance is you get the insurance companies lawyers on your side, not protection for your assets.
If it where an honest, fair system with appropriate damages paid to real claims... sure. But the abuses of the civil courts has made it similar to doing taxes... you pay what the system requires and use the rules of that same system to only pay what is required.

 

[ncbill]

Now days they look at the assets available to size their claims, not the actual injury. Having more insurance is just an addition to your assets to make a claim against. As others have stated, the only value of the umbrella insurance is you get the insurance companies lawyers on your side, not protection for your assets.

An umbrella allows a large, immediate offer to the plaintiff.

Being able to present a 7 figure settlement means the insured almost certainly won't have to worry about a civil trial.

BTW, you might have to fire that insurance company attorney and seek better counsel.

I saw that happen with a personal injury suit against one of my former employers.

 

[Bestwifeever]

Shouldn't his assets be available to pay the victims when he is found liable for negligence after a wreck?

Yes.

And the goal imo should be to figure out how to stop him from driving under the influence or otherwise jeopardizing the safety of others, not how to protect his assets from lawsuits if he harms someone. Two different issues.