Asset protection is the safeguarding of your belongings from creditors and potential creditors. Although often overlooked, effective estate planning creates various opportunities for you to use asset protection strategies to protect yourself and your family. Too often, the below estate planning issues are neglected:
Ignoring Asset Protection For Your Children. Having a Will or Trust created to ensure your assets go directly to your children in a fashion you desire is only the first step. Unfortunately, not including asset protection language into your estate plan for the benefit of your children may be costly. For example, if your daughter inherited your money and used it to make bad investments, your hard-earned money could just disappear. By way of another example, if your son is the beneficiary of your estate and later is divorced, his ex-wife may leave the marriage with a portion of his inheritance. By incorporating asset protection into your estate plan, you can provide for your children and simultaneously protect their inheritances.
Disregarding Medicaid Planning. Long-term care is expensive, especially without comprehensive health and long-term care insurance. In fact, an extended stay in a nursing home or other long-term care facility can obliterate out your nest egg. A fantastic way to prevent this horrid potential is to include language known as “Medicaid triggers" in your Trust. Such language allows your Trustee to engage in Medicaid planning on your behalf in the event you become disabled.
Neglecting To Safeguard Your Real Estate Assets. If you own land, an office, investment property or a rental property in your own name, you may be subjecting yourself to unwarranted risk. For instance, if someone is injured on one of these properties, they can sue you individually, and if they prevail, collect some or all of your assets. However, if you own the property through an entity, such as a corporation or a limited liability company, the injured party can only collect against the property owned by that entity thereby protecting other assets you may own.
Not Protecting Children With Special Needs. When you have a child with special needs, leaving that child with a direct inheritance can deprive this child of much-needed government benefits. This problem is easily preventable by having a Special Needs Trust created for the benefit of this child. A correctly drafted Special Needs Trust enables you to appoint a predetermined Trustee that will oversee your child’s inheritance, safeguarding the child’s benefits and permitting your child to enjoy an excellent standard of living.
Based on the above it is clear that asset protection is an important aspect of estate planning for you and your family. An experienced estate planning attorney can help you determine which asset protection strategies are appropriate for you and your family.