LIABILITY - "its all your fault!" If you don't know, find out why....

What is Liability and why should I care?

- Excerpts courtesy of www.trustmakers.com - USA

"Every person has the right to claim harm until a court decides if it is a “legal harm.” In the future, this is unlikely to change."

Liability lawsuit include unsuspecting and very often “innocent” people.

"....Many people cover their risks by proactively minimizing the chances that they may be the victims. This is absolutely the right line of thinking as a first defense. We applaud this, but it does not minimize your risk of damages. You may think your lifestyle is blameless, but someone might still bring a suit claiming that they are entitled to your assets. Despite the fact that it is possible to minimize our risks, it has become increasingly important to be in command of any damages that may result from the unseen and the unthinkable.

Did you know Canadian Lawyers look to the USA for better and new ways to sue people in Canada?

To attest to the fact that though we may be law abiding, morally conscientious citizens, it is still possible to be placed in the line up of the legal firing squad. This week in New Jersey, in the divorce case of the McGreevys (the X-Governor of New Jersey who had a gay affair during his time in office), Mrs. McGreevy announced that she will seek the assets of Mr. McGreevy’s boyfriend, their real estate associate Charles Kushner (who was the biggest financial supporter of McGreevy), and also the New Jersey Senator, Raymond Lesniak. The reason why was not announced, but the press is assuming that they all knew about the affair. Mrs. McGreevy petitioned the court to subpoena all financial records and communications within the group. Keep in mind, this is the McGreevy “divorce case” and Mrs. McGreevy is seeking assets of others outside the marriage.

It should be noted that if your assets are protected, they are protected regardless of whether or not you are party to a suit. Asset Protection does not exempt you from having to defend yourself in a lawsuit; it only protects your assets in the event of a judgment against you. Many people neglect to protect their assets because they feel that their risk is low.

Some risks stare us in the face, such as the “Slippery Floor” sign or “Beware of the Dog.” We use, and recommend, insurance for these glaring risks; we consider this the first line of defense, but it is not the only protection needed in a prudent and secure Asset Protection Plan.

A good example is a restaurant owner who has ample insurance to cover a slip and fall, yet the same policy does not cover the restaurant owner’s sexual harassment suit filed by a customer against an employee. The same scenario is possible in other business situations such as physician’s offices, corporate boards and schools.

Liability is not a “static state” just as an Asset Protection Plan is not a “static plan.” If you have followed our newsletters, you understand that the TrustMaker’s model of Asset Protection is “kinetic” and allows for movement in the event of financial duress or creditor attack. This, of course, is all done legally using trusts to control and separate assets from each other. We all have firewalls and protection programs on our computers, yet we leave our valuable assets sticking out in society, unprotected! Understanding the enemy “liability” is to know that this opponent does not stand still, it moves through the open doors. There is no way to predict what liability may enter your pathway, no matter how much you plan.

Contracts and planning also have their own liability, even when one plans for a static state by contract or by protection of statutory law, it may not be enough. “Judge Alex”, a TV Judge, will face the Supreme Court to decide if California state law trumps an Arbitration Clause in a contract. Judge Alex claims that by state law, his agent is invalid and he does not have to pay the 12 percent he owes his agent. The dispute on the other hand, under the contract written by the William Morris Agency, claims that it should be settled in Arbitration. This is an example of a dispute that was written and signed and is still not agreed upon, and you would think that a lawyer and a Florida State Judge would know what they were doing when it comes to signing a contract. If Judge Alex loses, he will have to write a check for 12 percent of his gross earnings from the show.

Here are some other forms of liability.

Vicarious Liability
The legal principle of vicarious liability applies to hold one person liable for the negligent actions of another when engaged in some form of joint or collective activity even though the first person was not directly responsible for the injury. For instance, a parent sometimes can be vicariously liable for the harmful acts of a child, and an employer sometimes can be vicariously liable for the acts of a worker.

Third Party Liability
The obligation to compensate another person harmed or injured by a negligent or wrongful act or omission. A person other than the parties to a liability policy (i.e., not the insurer nor the policyholder) is a third party. When an insured (the first party) causes a loss, the insurer (the second party) assumes the insured's liability up to the policy limit.

This means that the damages are subrogated to avoid over punishing the insurance company beyond the limit of the policy. This forces the third party’s insurance company to become financially responsible.

Strict Liability
Strict Liability is a legal doctrine that makes a person responsible for damages and loss caused by their acts and omission regardless of their intent or culpability. It is often seen in cases of product liability, corporation law and criminal law.

We cannot know everything, especially in the global economy of business. My last example is about the clear-cut law, section 230 of the Communications Decency Act, this law keeps site owners free of liability for the actions of their users. There is a court challenge to this law, and the boundaries of responsibility seem to be broadening. The lesson is that the “who” can bring a suit is now broadening.

Four families (New York, Texas, Pennsylvania and South Carolina) whose underage daughters were sexually exploited by people that they met on MySpace are suing News Corp. News Corp stands accused of “doing nothing” to prevent these events.

Every person has the right to claim harm until a court decides if it is a “legal harm.” In the future, this is unlikely to change. In a conservative prediction, it is likely to broaden. There has never been a more important time to implement a plan to protect your assets!

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