Many people only have a vague idea of what happens when they get sued by say, a creditor that wants his money back, or by an ex-spouse that wants part of the estate after divorce. We need to review this process so that you understand how important it is to protect your assets the right way.
The process, right from filing a complaint to collecting a judgment is long and takes a lot of effort. It disrupts the normal working cycle and can lead to business losses.
Case Scenario
David has been sued for malpractice by a client that claims that he provided wrong advice in connection with a business tax payment. The client is demanding damages to the tune of $50,000.
Here, David is the defendant in the case, and the client is the plaintiff. Let us look at how things pan out.
The Plaintiff’s Lawyer Tries to Secure Assets
From the onset, the lawyer of the client will try to use different techniques to get access to the assets of David before even the trial begins. Since he feels that David needs to pay for damages, the plaintiff will request the court to create a lien on the assets that David has, including the tangible and intangible assets and any other asset that are held by a third party.
The lawyer asks the court to attach money that David holds in financial institutions. The plaintiffs’ lawyer might also seek to have a “freeze” injunction to prevent David from re-titling, transfer, or to sell the assets when the case is pending in court.
The attorney will also try to use pretrial tools to force David to settle. The good thing is that there are a host of properties that cannot be attached in this process.
In many cases, the court notifies the defendant, in this case, David, telling him that the plaintiff is chasing a trustee process to attach his assets. David can work with an asset protection attorney to contest the plaintiff’s efforts.
However, on rare occasions, the plaintiff is allowed to attach the property of the defendant or be given the trustee process without notifying the defendant. This only works when the plaintiff can prove that the defendant will most likely transfer or conceal the property in case they are notified in advance.
Discovery Phase
Once the client files a complaint and the attachment requests are handled, the next step is a pretrial phase, also called the discovery stage.
Here, both parties try to discover as much as they can about the other person or party involved in the case. Each party requests documents, written questions, and any other information that requires affirmation or denial, and deposition taking.
Deposition taking is the process whereby a person interested in the case, whether directly or indirectly involved in the lawsuit, are asked questions directly under oath. Both parties are free to use a lawyer to ask the questions. In the case of David, the client’s lawyer will ask Daniel, any third-party witnesses, or any expert witnesses questions related to the case. On the other hand, Daniel’s asset protection attorney also asks the plaintiff and his witnesses questions.
During this process, both parties are allowed to prepare the case and come up with witnesses. The process takes longer, usually three years or more to conclude.
This phase aims to make sure that the parties have had a chance to search for facts before the trial begins.
The Trial
If the case doesn’t get dismissed pretrial, it can be settled out of court or proceed to trial in front of a judge or a jury.
After the trial, the judge makes a decision depending on the facts that have been presented before the court.
In this case, David might be forced to pay a monetary award. He also has to pay pre-judgment interest, which is usually calculated from the first day the case was filed in court.
If David sees the judgment to be unfair, he can prompt his asset protection lawyer to file an appeal in the appellate court within 30 days of the judgment.
Usually, the case is settled within the appeal period because the plaintiff wants to get paid fast.Try and Avoid Litigation
The litigation process takes longer, and it can become costly for you. This is why you need to work with an asset protection lawyer to come up with a comprehensive asset protection plan for your estate. This mitigates any eventualities that might arise.
