In the event of an unfortunate lawsuit outcome, you might have to listen to a judgment from the court. If the case overall doesn’t go as you expect, a court might make a decision against you, saying that a creditor or lawsuit plaintiff is correct and requiring you to pay damages or other legal fees.
If you’re a high net worth individual like a business owner or other entrepreneur, you might wonder just what property or assets might be at risk from a court judgment.
What’s a Judgement
Put simply, a judgment is any court order resulting from a lawsuit. At the conclusion of a legal action, a court will make a decision one way or the other: either the plaintiff is correct or you are (or, in some cases, you are both correct/incorrect and are both responsible for legal fees).
If the creditor or lawsuit plaintiff wins your legal battle, that judgment will include court orders regarding:
- How much money you owe the plaintiff or creditor
- How you will pay the plaintiff or creditor
- And more
Once a judgment is rendered, you can sometimes appeal the decision. But in many cases, it’s final. The last thing you want is a judgment to come down from a court, ordering you to pass valuable property or liquid capital to one of your legal opponents.
Why is Property Sometimes Seized in a Judgement?
Property might be seized in a legal judgment if the defendant in a case doesn’t have enough liquid capital or cash to pay the monetary awards they are ordered to hand over to the plaintiff.
Say you are sued by a customer who says that your business is responsible for their injuries. It doesn’t matter if they are correct; all that matters is that the court believes them and has now ordered you to pay damages.
Now imagine that the court says you need to pay $10 million in medical fees. If you don’t have $10 million ready to go, you might be ordered to liquidate valuable assets like your car, your house, and more.
Property is liquidated to create the money needed to pay for court bills, damages, and other associated expenses. And if you think a court is limited in the kind of property that it can seize to pay for those damages, think again!
Kinds of Property That Can Be Seized in a Judgement
In truth, many different kinds of personal property can be seized in a judgment for liquidation or debt repayment purposes. Here’s a far from comprehensive list of the property you could see taken away from you from one adverse court case:
- Cash in your bank account, of course
- Any wages or investment accounts, including money in your IRA accounts, though it depends on the circumstances
- Cryptocurrencies like Bitcoin or Ethereum
- Retirement benefits (though, like with investment accounts, it depends – some employer-sponsored retirement benefits are exempt from seizure, for example)
- State and federal benefits, including your pension, which could be garnished for a very long time depending on what you owe
- Motor vehicles, like cars, trucks, motorcycles, boats, and aircraft
- Jewelry and other findings
- Art, especially fine art
- Business equipment, which can also cripple your ability to continue your business operations
- Household goods, ranging from fine dishes to couches to televisions and more
- Any other assets that you gifted to your spouse or to some other individual, especially if you’re convicted of fraudulent conveyance (sending money with the intent of defrauding a creditor)
- Real estate, including your personal home (though different states have different laws regarding this)
- Inheritance funds and property
Technically, the sky’s the limit! There are very few types of property that are protected against seizure or a court judgment. Because of this, it’s vital that you secure any valuable assets that might be targeted by creditors or lawsuit plaintiffs before you run the risk of losing a court case, not after.
Is Property Always Seized in a Judgement?
No. Generally, property is only seized in a court judgment if the defendant in a case is unable to pay court fees, legal damages, and other expenses for one reason or another. For instance, the defendant might not have enough money in their bank account, retirement accounts, and so on.
Property is only seized and liquidated as a last resort. This is partially because of convenience. It’s easier for a court to take money from a retirement account, for example, than it is for the court to take possession of your vehicle, sell it, then transfer the proceeds to the plaintiff in a court case.
Still, just because it's a hassle to liquidate your property, don't assume that motivated opponents won't do it. The more property you accumulate, and the higher your net worth climbs, the more motivated your enemies will be to take everything you've earned over the years.
This is especially true of real estate – since many real estate properties can sell for hundreds of thousands or millions of dollars, they're prime targets for court judgments that demand the liquidation of some or many of your assets in order to pay for damages.
Protecting Your Property from Seizure
Fortunately, there is a strategy you can employ to safeguard your property from all kinds of judgments and seizures: asset protection.
In a nutshell, asset protection with Dominion involves setting up an offshore asset protection trust. This legally durable vehicle will require you to transfer those assets (or, rather, ownership of those assets) to the trust itself, so you no longer legally own things like real estate, vehicles, etc.
That doesn’t mean you can’t live in or use those assets, of course! But it does mean the assets can’t be seized in the event of a negative judgment against you.
Put yourself in the shoes of a lawsuit defendant who just lost in court. You owe $10 million. If the majority of your assets that you earned or purchased over the years are in an offshore, resilient asset protection trust, you no longer own those assets. Therefore, a court can’t demand that you turn them over. Even if you wanted to (and you don’t), you couldn’t.
Even better, an offshore asset protection trust isn’t required to listen to the rulings or demands of US courts or creditors. If your trust is set up properly, and if the trust is administered by the right trustee, the trust can ignore claims for your assets, keeping them safe and giving you regular distributions of money or other assets as dictated by the trust documents.
All in all, an offshore asset protection trust is the ideal way to protect your property from any kind of seizure. If it’s set up in the right jurisdiction, and if it’s drafted with the right documents, it’ll effectively be invincible, even in the worst circumstances.
Get in Touch with Dominion Today
To recap, if you are faced with a negative court judgment, practically any property you deem to be valuable could be seized by creditors or lawsuit plaintiffs. That property will be used to pay for legal fees, debts that you owe, and much more.
The only way to protect your assets from judgments in perpetuity is to place them in a secure asset protection trust. At Dominion, we specialize in the creation of comprehensive, legally robust offshore asset protection trusts that will keep liquid cash, real estate, and other types of assets safe for years to come. Contact one of our representatives today to learn more.