Wilkins felt like the world was coming to its chaotic end. First, he’d had an awful motor-vehicle accident, one in which he was fortunate to escape with his life. Rather than expressing sympathy for Wilkins, his wife had chastised him roundly for not having had a will in place as she had several times requested. The accident made him check his life insurance, where he discovered he still had his ex-wife listed as his beneficiary. Better fix that, Wilkins surmised. Then Wilkins had his paycheck garnished for old credit-card debt his ex-wife had run up during their divorce proceeding, that his ex-wife was supposed to have paid. Between the debt garnishment and the income withholding for his child support, Wilkins could barely pay his mortgage to keep a roof over his current wife’s head. Then, when Wilkins got served with a lawsuit for the motor-vehicle accident, his auto insurer refused to defend it, saying that Wilkins had let his policy lapse. Soon after, Wilkins got a summons from the court for an infraction for not having the required vehicle insurance in place. Wilkins was beginning to wonder if bankruptcy would help, but then, he’d probably lose his home and his wife.
Landmines
Legal issues have a way of sneaking up on you, especially if you don’t have your legal affairs in order. When you don’t anticipate the legal issue, you often miss opportunities to prepare for it, soften its blow, or even avoid it entirely. That’s the purpose of this guide, to encourage you to get your legal affairs in order before it’s too late and you have complications and losses you could have avoided. To further illustrate the prospect for legal landmines, consider the following common legal landmines, in no particular order. Avoid these landmines if you can. And if they’re not a particular risk for you, let them remind you that other landmines may lurk. Keep this guide’s cautions and audits in mind. Keep your legal affairs in order.
Violations
Traffic violations can certainly sneak up on you if you do not obey the traffic laws. Speeding, disobeying traffic signals and signs, failing to stop or yield to traffic having the right of way, and drunk or drugged driving are all relatively common traffic violations, among dozens of less-common violations. When the violation causes an accident, the infraction or charge and its penalties increase. When the accident causes a death or injury, the charges and penalties increase further. Traffic violations are a peculiar landmine for two reasons, even beyond the criminal or civil penalties and substantial civil liability that can accompany them. First, a single serious traffic violation or an accumulation of lesser violations can lead to loss or restriction of your driving privileges. Losing your driving privileges can mean losing your job, ability to provide and care for your children and home, and other serious collateral consequences. Second, the traffic stop can lead to police discovery of other violations such as the intoxicated driver, unregistered or uninsured vehicle, unregistered or illegal guns, illegal drugs or contraband, open intoxicants, and other implicating items inside the vehicle. Beware operating a motor vehicle in anything other than lawful manner. Traffic violations are common legal landmines.
Home
Your purchase of a home, or your sale of your home to purchase another, is an exciting and satisfying event when done properly. But home purchases and sales are also common legal landmines that can set you back years in your finances and crush your dreams. Home purchases hold landmines around financing costs including adjustable interest rates and short terms with balloon payments. If you get in over your head with bad note terms and the housing market and interest rates turn against you, you could end up unable to afford your payments or to sell your underwater home. Foreclosure, bankruptcy, and seven years of bad credit with inability to buy another home could follow. Buying a home also carries inspection risks, trying to discover any material defects that might set you back tens of thousands of dollars in repair costs. Selling a home can be equally hazardous, especially if your home has foundation, roof, pest, or other issues about which you know but fail to disclose. You could be on the hook for the repairs or have to take back the home. Beware the several legal landmines of buying or selling a home. Get sound representation to avoid expensive and dream-shattering legal mistakes.
Collection
Debt collection is another common legal landmine. Americans have such easy access to credit cards, home equity loans, vehicle loans, and other forms of credit that average individuals carry staggering loads of debt. A small stumble like a brief job loss, long-term illness, or disabling injury, and that debt may come due. Credit defaults can be just a month or two away. Unexpected medical debt is another big credit concern. One hospitalization of a dependent family member may be all it takes to leave you with thousands of dollars in medical debt that you are not prepared to pay. That’s when things get dicey. Debt-collection firms can be swift to turn your default into a civil judgment, after which they can garnish savings and checking accounts, and garnish your wages. Those actions can make your whole financial structure tumble down, putting at risk your housing, transportation, and everything else you must pay out of your paycheck or accounts. Beware of obligating yourself legally to repayment of substantial debt. The legal and financial risks are great. Instead, build yourself a financial and legal fortress first. Then, go spend cash on the extra things that you wish. Avoid borrowing your way into unmanageable legal risks.
Bankruptcy
Bankruptcy is itself a legal landmine. When the economy slows or recedes and jobs get scarce, workers pay the price in layoffs, lost overtime, and lost promotions, bonuses, and pay increases. Things can get tight quickly, especially if you’re carrying substantial inflexible debt. Bankruptcy may beckon as an easy way out. But bankruptcy isn’t as simple as it sounds. Many consumer bankruptcies today don’t wipe out your debt. If you have a job, you are instead more likely to commit to a wage-earner’s plan. The plan may relieve you of some debt, but it won’t relieve you of all debt, and you’ll still have substantial payments to make for years. And some debts, like most educational debt, you cannot discharge in bankruptcy. Once you pull the trigger on bankruptcy, you’re stuck. You can’t file for bankruptcy again for years. Don’t jump into bankruptcy expecting to get a sweetheart deal for starting over fresh. It’s not that easy. Bankruptcy can be its own legal trap, if you don’t get the qualified legal representation and sound financial and legal advice you need.
Boundaries
Owning a home and land can be a great privilege and pleasure. Home ownership can also be a great financial investment and form of personal security. You are generally free to do as you wish in your own home and on your own land, within the bounds of the criminal laws. But real property has boundary lines. And the boundaries can be a legal landmine. Cross the boundary of your land, and you’ll be on someone else’s land. Indeed, if you don’t have your neighbor’s permission, you’ll be trespassing. Just taking a stroll across your neighbor’s land can cause its own problems, sparking complaints and disputes. But observe something private or confidential while strolling uninvited on your neighbor’s land, and you may be in much hotter legal waters for invasion of privacy. And if you cut down a tree, put up a fence, pave a driveway, or build part of your new home on your neighbor’s land, you’ll be in even hotter legal waters for ejection and money damages. You don’t even have to trespass on purpose. You may just have been innocently mistaken as to the property line after someone moved a marker or stake. Boundary disputes with neighbors can not only be expensive but also destructive of neighbor relations and neighborhood peace. Beware the legal landmine of boundary disputes. Respect property lines at all costs.
Coverage
Insurance coverages and laws are another legal landmine, especially because you generally don’t discover the insurance issue until an unexpected loss triggers the coverage dispute. You may think you’ve got great insurance on your home, vehicle, business, or other property or interest. But insurance policies can have several exclusions including, for example, excluded drivers of insured vehicles and excluded business activities in the insured home. Insurance laws can also give insurers other grounds to void coverage for things like material misrepresentations on the insurance application or intentional or illegal acts causing the loss. The coverage itself may be inadequate, not reaching the property or activity you assumed you’d insured. And insurance policies have limits, sometimes much lower than the average loss. Your $50,000 coverage limit for motor-vehicle accident liability may, for instance, be woefully inadequate to cover a $1 million injury loss or an even bigger loss from a wrongful death. Beware the legal landmines surrounding insurance coverages. Get qualified advice on those issues.
Divorce
Divorce is, of course, a very hard and unfortunate occurrence in its own right. Yet the process of divorce, as necessary and appropriate as it may be, can carry its own legal landmines. Emergency protective orders issued without notice at the initial filing of the divorce action can freeze accounts, eject a spouse from the home, cut off contact with children, and interfere with access to vehicles, clothing, and other necessities for living and work. Losing child custody can be devastating, of course. Yet exaggerating the unfitness of the other parent with false allegations of child abuse or neglect, to try to gain custody, can be even worse, even resulting in criminal charges. Discovering one another’s income, assets, debts, and business activities, and valuing personal property, the marital home, and business interests for a fair division, are other legal landmines. Fail to discover valuable assets, fail to prove their substantial value, or fail to secure payment of debts, and you may end up with a ridiculously bad outcome, without the property or financial support you deserve and instead having to pay for more than your fair portion of marital debt. Getting caught after the divorce judgment for having hidden assets can be far worse, resulting in a reopened divorce judgment and punitive new award. Retain skilled legal representation. Act sensibly and speak truthfully even in the midst of the roller coaster of emotions divorce triggers. And watch out for the legal landmines of divorce.
Support
Support obligations in divorce are other legal landmines. Divorces with children typically result in a judgment requiring one spouse or the other to pay child support. In the usual case, someone is going to pay child support. Spousal support is less common. Longer-term divorces with a disparity in income between the spouses tend to result in one spouse paying the other spouse spousal support or alimony. The spousal support may last for a period of a few years of adjustment or longer in the case of an elderly or disabled spouse who cannot increase income after divorce with additional training or education. Support orders, though, can turn into legal landmines. Once support orders are in place, they can be hard to modify, even though one’s income can go up and down dramatically in some lines of work, while job loss is possible in any line of work. With job loss or income fluctuation, the one paying support may quickly fall in arrears. Child-support enforcement actions can include seizure of tax refunds, garnishment of accounts, and even contempt sanctions and jail. Beware support orders, arrearages, and enforcement actions. Get qualified representation to modify orders as often as necessary to avoid arrears.
Wills
Wills can be another legal landmine. The biggest landmine may be not having a will in place for one’s sudden and unexpected demise. Most significant of all, you could miss the opportunity to recommend a qualified and preferred guardian for your minor child or children. Your minor child or children could, on a probate court order, end up under the care of someone to whom you would not have entrusted your children, when the probate court would have ruled otherwise if you had a will recommending different guardians. Your property may also go to family members whom you would not wish to benefit, leaving other family members, friends, or charities you would prefer to favor without any bequest. Having no will could also leave your family members disputing, when you would much prefer that you would have left them in good relationships and circumstances. Having no will can also increase probate costs, delay distributions, and leave dependent family members in painful uncertainty and temporarily without support. If you do execute a will, other legal landmines can arise if you do not update it around significant life events like marriage, birth of children, deaths in the family, or divorce. Beware the legal landmines around wills. Get qualified legal representation.
Reflection
Which of the above legal landmines might be ones you should address now with qualified legal representation? What other legal landmines can you discern from the prior chapters in this guide that you should address now with qualified legal representation? Make a list of legal issues to address, each with notes about how to go about doing so. Review your list once each week to ensure that you make steady progress. Don’t attempt to solve everything at once. Legal affairs require periodic attention and due diligence. Don’t obsess or procrastinate. Instead, plan thoughtfully and act diligently.
Key Points
Common legal landmines remind you to keep legal affairs in order.
Traffic violations can trigger a cascade of legal issues leading to loss.
Buying and selling a home can have several legal traps causing loss.
Debt collection can trigger a series of legal and financial issues.
Bankruptcy filings are their own legal landmine to navigate.
Property boundary issues can be expensive and destructive.
Insurance coverage issues can cause substantial losses.
Divorce presents a series of potential legal landmines needing care.
Spousal and child support orders are themselves legal landmines.
Not having an up-to-date will in place can be a big legal landmine.