You take steps to safeguard your money and property in life. But did you know that you can also use your estate plan to protect your assets from creditors, lawsuits, and even beneficiaries who overspend?
When it comes to protecting your assets during the estate-planning process, it can be challenging to know where to start. Every estate is different, but you might want to consider some of these often-successful tactics:
Making Your Business a Limited Liability Company (LLC)
If you run a business and a creditor comes after you for business debts, they might go after your personal assets if your business can’t pay up. Similarly, if someone files a lawsuit against your business, their attorney might also attempt to recover damages by going after your personal assets.
However, when you make your business an LLC, it becomes a separate legal entity. This means that if a creditor goes after your business, they can't recover damages from your personal estate.
If you have considerable personal assets and want to pass them on to your children or others after your death, it’s worth protecting them from business creditors. An estate planning attorney can advise whether you should establish an LLC.
Creating an Asset Protection Trust
When you legally separate yourself from your assets, you make it more difficult for the courts, creditors, and others to come after those assets. If you want to protect your assets after your passing and ensure tax efficiency both before and after death, it might be wise to consider an asset protection trust.
A trust like this safeguards some of your wealth by effectively separating it from you. With an asset protection trust, you put some of your assets into an irrevocable trust (a trust you can’t change). You then appoint a trustee to oversee the trust.
This means that the funds or other assets in the trust don’t legally belong to you, but you can direct how they’re used by guiding the trustee. Of course, the trustee would need to be someone you deeply trust.
Creating a Special Needs Trust for a Loved One
If you want some of your funds to help a loved one with special needs, a special needs trust is a way to ensure the money goes to that person (and can’t be accessed by creditors or spent by a negligent executor).
You can also set up the trust to pay out at regular intervals (monthly, quarterly, annually, etc.) if you wish. Gifting a one-time lump sum might mean more of the funds go to taxes, and there’s also a risk of mismanagement by the trustee or the person with special needs.
If you want to make sure your assets go toward helping a friend or relative with special needs, this isn’t the only way to do it. An estate planning lawyer will be able to discuss your finances and goals with you before helping you craft a plan that will ensure your loved ones are well cared for after you pass on.
Keep Your Assets Safe With the Right Estate Planning Attorney
You’ve worked hard for your assets, so you want to make sure they’re distributed as you see fit. You might not be able to stop the government, creditors, and other entities from trying to get their cut of your money, but you can take steps to protect it. The attorney at Heritage Legal, PC has years of experience helping the Palm Springs community protect assets through thoughtful, personalized estate planning. Want to see how we can help you? Don’t hesitate to reach out!