Estate planning and asset protection go hand-in-hand. If you pass away, an estate plan ensures that your assets — whether that’s personal property, stocks, bonds and more — go where you want them to go.
Asset protection guards your wealth with legal strategies as well as financial planning. At eLegacy, you’ll work with a dedicated legal team of three headed by one attorney who will be your point of contact. When you call in, you’ll always speak to the same person. Our attorneys are full-time and work only for us, as opposed to other companies that hire attorneys on a contract basis. What that means is you have someone who has your back and your best interest at heart.
Creating an estate plan is the most effective way to protect your assets when you die.
There are circumstances other than death that create a scenario where you want to protect your assets. That includes if you’re going to jail, or if you want to protect your assets from the government. We will cover those in future posts.
If you’re concerned about creditors impacting your estate after you pass away, an individual asset protection trust may be the best option for you.
What is an estate plan?
At eLegacy, our Trust Based Plans include the following documents:
- Revocable Living Trust
- Will
- General Durable Power of Attorney
- Healthcare Power of Attorney
- Deed
In order to protect your assets, the most important part of this is the revocable living trust. You can also create an individual asset protection trust.
A trust is defined as a distinct, legal entity that’s designed to hold your assets. When you create a trust, you’re retitling things like your bank accounts, real properties, and investments under the name of the trust while you’re still living. You’ll still have complete control over all your assets, it’ll just be under a different name. You will then name one or more successor trustees that can take over if you die, or you are incapacitated.
How does a trust help my family?
Who needs an estate plan? Everyone. But not everyone needs estate planning and asset protection, at least not in the form of an individual asset protection trust.
A trust ensures that whatever you own gets passed to who you want it to, no matter how much or how little you own. That includes something as simple as camping equipment.
Our law firm handled the case of a young man named Daniel who had been killed in a head-on collision. Daniel had an older brother, Jacob, and a stepfather, who he was close to. Because he didn’t have a will in place, his assets were distributed according to his state’s intestacy laws. Under the state’s intestacy statutes, the assets of an unmarried person with no children are distributed to the person’s surviving parents. Because the other driver was considered at fault, Daniel’s estate received over $1 million in an insurance pay-out.
That money went to his mother, who was severely addicted to methamphetamines, and his father, who had physically abused Daniel and disappeared from his life when Daniel was about 8 years old. Jacob and their stepfather received nothing. You can read the rest of that story and others here.
Without a plan in place for your assets, there’s not an assured outcome that is best for your loved ones.
Why would someone need an individual asset protection trust?
An individual asset protection trust takes a trust a step further. If you plan to leave your estate to an individual heir, it’s subject to any legal claims or judgments against them. That means their future creditors could get their hands on it.
An individual asset protection trust protects them from a creditor, including an ex-spouse in a divorce. An asset protection trust contains a spendthrift clause, ensuring that the beneficiary can’t sell, spend, or give away trust assets without specific stipulations.
Asset protection trusts can be either domestic or foreign. With a domestic asset protection trust, your assets will still be within the U.S. legal system, putting them at potential risk of court orders, like liens or judgments, bankruptcy laws, and various state laws. Not every state allows them, either.
A foreign asset protection trust, also known as “offshore,” is established outside U.S. jurisdiction. They can cost more to set up, but they do offer more privacy and are more effective for protecting your assets.
Schedule a complimentary consultation with our team and let’s talk about what an estate plan could look like for you. Everything will be absolutely confidential and can be done from the comfort of home.