Should I worry about asset protection?

[Olav23]

Hi all,

My wife recently graduated law school and is now working in a small law firm. Everything she does is signed off by the main attorney that owns the firm. Consequently, my wife has no liability insurance, and thinks that if anything were to go wrong, they would just go after her employer.

I have sizable assets (around 250k) and am nervous that if she messes something up, they could come after us as well as the employer.

Does anyone have any thoughts on this? Should I not worry until she goes into private practice?

Thanks!

 

[MasterBlaster]

Olav:

Well you can never have enough insurance, just in case of that monster lawsuit with predatory lawyers.

However, rest assured that your qualified retirement assets like 401k and rollover IRA's are completely protected from lawsuits. Normal IRA's are protected, depending on state law, to perhaps a million or more.

If you are really worried you should get an umbrella insurance policy to protect your home (if any) and other after tax assets.

 

[Olav23]

Thanks MB for the quick reply. I live in NYC, so, still just a renter .

I don't even have a car or auto insurance! Or even renter's insurance. The only insurance I carry is health/dental. I feel like I am almost completely off the insurance "Grid".

About 150k of that is in taxable accounts. I will look into umbrella insurance and see what that covers. Thanks for the tip!

 

[kumquat]

See a lawyer, maybe your DW could recommend one.

 

[Webzter]

We just purchased an umbrella policy (covers house and car up to $1.5mm) from State Farm for an additional $100 a year. (policy itself is $87 but we had to up home and auto coverage a bit as well)

I also priced out $1mm in general liability even though I sub through other consulting companies. That would set me back another another $3k.

Your area may be different, and your needs are likely different, but that seems like a relatively low price to pay for being able to sleep soundly at night.

 

[Martha]

Olav, is she absolutely sure that her employer doesn't carry malpractice liability insurance that covers her? It is very unusual, even in a small practice, to not cover everyone in the practice. I would be troubled by that. If she ends up actually not having coverage she should get some--just because another lawyer signed her work doesn't mean it isn't her work. This is less important if she hasn't been admitted to practice law yet and hasn't passed the bar, but it is very important once she is a licensed attorney.

Get renter's insurance to cover other liability and consider an umbrella. These likely don't cover malpractice, but you have assets to protect.

 

[FinanceDude]

Olav, is she absolutely sure that her employer doesn't carry malpractice liability insurance that covers her? It is very unusual, even in a small practice, to not cover everyone in the practice. I would be troubled by that. If she ends up actually not having coverage she should get some--just because another lawyer signed her work doesn't mean it isn't her work. This is less important if she hasn't been admitted to practice law yet and hasn't passed the bar, but it is very important once she is a licensed attorney.

Get renter's insurance to cover other liability and consider an umbrella. These likely don't cover malpractice, but you have assets to protect.

Our chamber of commerce just got liability coverage on all of the directors for $2million per occurrence, in case one of our fundraisers goes awry...............

 

[CuppaJoe]

Your wife might try to get a look at the malpractice insurance file which may be required for continued membership in the state bar for the firm owner. I know the coverage we use requires a sort of re-application each year which would require the owner to specify new hires. A letter regarding our policy states: "The policy provides automatic coverage for acts on behalf of the firm for employees joining the firm during the policy period. We do request, however, that you notify our office of any additions of attorneys midterm by completing a NEW LAWYER Supplement...." It may be a good idea to discuss this with the owner.

Malpractice is no small matter both financially and time and hassle wise; many of our clients sue their previous attorneys. If we were sued it would be a $10,000 deductible. I believe they could only go after the community property part of your assets unless you live in an area with a different system. BTW, renter's insurance is relatively inexpensive; I keep a policy in case a visitor or cleaning lady has an accident and it covers the contents of my apt. up to $20,000.

Tell your wife congrats, sounds like she will make a great attorney.

 

[FinanceGeek]

Am I the only one to see a bit of poetic justice when the spouse of an attorney is worried about getting bitten by others in his wife's profession?

 

[haha]

Am I the only one to see a bit of poetic justice when the spouse of an attorney is worried about getting bitten by others in his wife's profession?

You are the only one to mention it.

Ha

 

[Salaryman]

Get renter's insurance to cover other liability and consider an umbrella. These likely don't cover malpractice, but you have assets to protect.

Olav23, we just got 1mm umbrella coverage after upping our auto insurance coverage. The underwriter clearly stated that the policy covers your personal liability and not professional. My spouse is in the medical field.
Used Geico...we're in NYMetro too. reasonable rates, I thought.
Good luck with everything.