Quite a bit of estate planning needs to do with the way someone’s assets will be handed out to beneficiaries upon their demise. Yet, that is just a fraction of it. From creating an intelligent incapacity plan to solid probate avoidance planning, there is a considerable amount of measure that goes into creating an extensive estate plan. One essential element to consider is asset protection.
One of the most important things to understand about asset protection is that not much good can come from trying to protect your assets reactively when surprised by situations like bankruptcy or divorce. The best way to take full advantage of estate planning in regards to asset protection is to prepare proactively long before these things ever come to pass — and hopefully, many of them won’t. First, let’s cover the two main types of asset protection:
- Asset protection for yourself:
This is the kind that must be done long ahead of time of any proceedings that may undermine your assets, for example, bankruptcy, divorce, or judgment. This type of asset protection have many rules and regulations and it’s imperative to get the most appropriate advice from your estate planning attorney.
- Asset protection for your heirs:
This sort of asset protection includes setting up discretionary lifetime trusts instead of outright inheritance, staggered distributions, mandatory income trusts, or other less protective forms of inheritance. There are many levels of protection from having different strategies. For instance, a trust that has an independent distribution trustee who is the only person empowered to make discretionary distributions offers much better protection than a trust that allows for so-called ascertainable standards distributions. There can be some things that are not well understood – we are here to help you best ensure your beneficiaries and your legacy.
Potential errors can exist in within this type of estate planning, it’s important to acquire qualified counsel and not exclusively depend on basic learning about what’s conceivable and what is not. In broad perspective, let’s investigate three basic points when asset protection can help, including a well thought out estate planning that we can create together to set your legacy to your love ones.
It’s conceivable that you’ll never require asset protection, however, it’s securing to be prepared for whatever life tosses your direction. You’ve earned hard and well to get to where you are in life. Taking proper steps in preparing a well thought out estate planning will make life better so you can live well and leave your legacy accordingly. As life occurs, encountering unforeseen health circumstance or even a vast scale financial downturn could lead you bankrupt.
Bankruptcy asset protection strategy: Asset protection trusts
Asset protection trusts mean more than liquid asset. You can fund it with real estate, investments, personal things, and more. With this type of trusts, the individual managing those assets will be a trustee that you choose. Since the assets inside the trust aren’t in fact in your dominion, they can remain out of creditors’ reach — as far as the trust is irrevocable, properly funded, and operated in accordance with all the asset protection law’s requirements. Truth be told, asset protection trusts must be funded well ahead of time of any potential bankruptcy and have many initial and continuous conditions. They are not for everybody, but rather can be a right fit for the correct kind of individual.
One of the last things you need to have happened to the retirement fund you’ve worked hard for is for your kids to lose it in a divorce. For things to go as expected and to ensure your estate gets distributed properly to your kids — no matter how the marriage turns out — is the discretionary trust.
Divorce asset protection strategy: Discretionary trusts
When the trust is created, the assets it holds doesn’t directly hold ownership to the beneficiary which makes the trusts a smart thing to protect your assets in a divorce. Discretionary trusts allow for distribution to the beneficiary but do not mandate any distributions. Therefore, they allow receiving the assets by reducing the chances of your kid’s inheritance being taken from your divorcing spouse. Discretionary trusts, as opposed to outright distributions, are a smart way you can give hefty asset protection to your kids.
Family LLCs or partnerships are another way in protecting your assets in divorce outcomes. In general, discretionary trusts are more feasible to a wide range of money-related means, family LLCs or partnership are commonly more of a solid match for exceptionally well-off individuals.
At the point when an upset client or employee sues a business, the owner’s assets can be jeopardized and occur in a lawsuit. You don’t have to be a business owner to have your wealth taken, an injury from something as little as an outsider stumbling on the walkway outside your home can wind up depleting what you’ve worked so hard for. Good thing there’s insurance and it is also important to look in different ways to protect against this risk.
Judgment asset protection strategy: Incorporation
Having your business run as a limited liability company (generally referred to as a LLC) can help shield your personal assets from business-related lawsuits. Things occur and you will unforeseen circumstances that leads to lawsuits. Using types of liability insurance is tricky and do not depend on what you can research on the web or “common sense”. You owe it to your family to work with qualified experts, such as us as your estate planning attorney, to create the most appropriate asset protection plan for your business.
These are just a few ways we can optimize your estate plan in order to keep your assets protected, but every plan should be tailored to an individual’s exact circumstances. Give us a call today to discuss your estate plan’s asset protection strategies.
These are only a few ways we can maximize your estate plan to keep your assets properly secured, however every arrangement ought to be custom fitted to an individual’s situation. Call us today to examine your estate plan’s asset protection strategies.
BROUGHT TO YOU BY:
MMZ LAW, A PROFESSIONAL CORPORATION
341 W. 1st St. Suite 100
Claremont, CA 91711
MARIVEL M. ZIALCITA is the founder of MMZ LAW, A Professional Corporation, where she practices in the areas of Trust and Estate, Elder Law, Special Needs, Conservatorship, Trust Administration and Probate. Ms. Zialcita is a frequent speaker on trust and estate matters and holds memberships in the State Bar of California, Trust and Estate Section, The San Bernardino County Bar Association, Wealth Counsel and Elder Counsel. She currently assists in the pro bono legal services program at the James L. Brulte Senior Center in Rancho Cucamonga, California. She is based in Claremont and assists clients throughout Southern California.
|This information is educational information only and not legal advice.|