Life in the Golden State offers many joys and opportunities. The chance to build assets that support your retirement goals and help provide for your children and grandchildren is perhaps one of the greatest of those opportunities.
However, building up your assets is only one step toward the larger goal of estate planning. It is equally important to recognize the potential threats to your assets and understand what the proper precautions to protect them look like.
Understand the 3 Biggest Threats to Your Assets
The old saying, “the best defense is a good offense,” is a good attitude to have when it comes to protecting your investments. Being proactive now can prevent the kinds of vulnerabilities that put your holdings at risk.
On that note, below are three of the most notable threats to your assets and how to keep them safe:
1. Beneficiaries
You’ve worked hard to provide a financial safety cushion for your beneficiaries, but unfortunately, your spouse, children, and other loved ones could, in fact, pose the biggest threat to your assets.
Almost every family has at least one member who is either blatantly irresponsible or simply not that good with money management. Leaving cash or properties directly to these individuals may not only be a waste but also something that jeopardizes the assets you’ve set aside for others.
Therefore, it’s best to speak with an estate lawyer about creating trusts for beneficiaries who may not be responsible enough to handle a large sum of money on their own.
2. Federal Gift Taxes and Estate Taxes
Like most states, California does not impose an inheritance tax, but its residents are still subject to federal tax laws. Some people mistakenly believe their estate will be exempt from these based on lifetime gift exemptions, only for problems to arise because there is no way to predict what an estate will be worth when one dies.
With that in mind, it’s best to assume your estate will be subject to taxes and plan for those costs ahead of time in order to best protect your assets.
3. Unexpected Life Changes
So much can happen between the time you begin estate planning and the time of your passing. It can be difficult to think about emergencies and life-changing circumstances, but the reality is that anything can happen at any moment. The failure to plan for your own incapacity could result in a bitter family rivalry or cause your assets to be drained through legal fees.
Medicare may cover most healthcare costs for seniors, but as a rule, it will not cover the costs of long-term care. Depending on your needs, the cost of care could quickly reduce your assets. Even worse, if you have not planned for this possibility, you may not be able to choose who controls your care decisions or your assets.
Outside of sudden medical crises, something like an unexpected divorce can pose threats to your assets as well. Although California is a community property state, a contentious divorce could still put your assets in danger if you don’t take steps to protect them. An estate lawyer can help you and your spouse protect separate properties and avoid financial difficulties when the time comes.
Consult With an Estate Planning Attorney
Planning is the best way to protect your assets. An estate planning attorney understands how California and federal laws can affect your plans for the future and can help you take action to prevent future problems. Heritage Legal Palm Springs Estate Planning and Family Law Firm is here to help. Contact us today.