By Michael L. Dolan

It is a sad statement about what America is becoming when almost every commercial break on TV contains an ad for an attorney telling people that they can get rich quick because they were injured in an accident. One thing we should all remember is that these attorneys do not sue insurance companies; they sue people like you and me.

In the old days, when the neighbor kid came on your property and hurt himself, he would go home, and Mother would patch him up or take him to the doctor. Today, they call 1-800-SUE-YOURNEIGHBOR even before they take the kid to the doctor.

This unfortunate trend causes those of us who still believe in personal accountability to realize that we should be taking steps to help minimize the exposure to greedy lawyers and their “someone else should always pay for my misfortune” clients — like those who spill coffee on themselves and want the restaurant to pay them millions of dollars because they did not know that coffee was hot!

So, what can we do? Your first line of defense is always insurance. When looking at your property and casualty insurance, you should check the upper limit on the policy. This is the maximum amount that the insurance company is going to pay on your claim. It is almost always the first thing they reduce when you complain about your premium. You should also consider a substantial broad liability umbrella policy to cover additional claims that may exceed your base automobile or property coverage.

The second line of defense is to compartmentalize liability. Holding property and equipment or conducting your farm or ranch operations in limited liability entities can significantly reduce exposure to loss. Limited liability entities include irrevocable trusts, corporations, limited liability companies, and limited partnerships. There is no standard answer about which type of protection is best in your situation. You should work with an experienced attorney to determine which entity works best for your specific situation. Different types of entities are often combined together in the same plan.

Registering a limited liability entity with the secretary of state is only the first step to effective protection. These limited liability entities will only protect you if you take the steps to implement the strategy properly. The court cases that set aside these protections focus on what the person did with the entity after it was created. Proper implementation is the key to effective protection.

Lastly, plan ahead. You never know when these unfortunate accidents will occur, and it is virtually impossible to protect your assets after bad things happen.

Dolan is the principal of Dolan & Associates P.C. in Brighton and Westminster, Colo. Learn more on his website, estateplansthatwork.com.