Asset Protection and Your Estate Plan
Asset protection and estate planning go hand-in-hand. When creating your estate plan, your assets play a large role. The largest portion of estate planning is identifying who gets what asset. Your assets can be a key part of your legacy. They can set your children and other beneficiaries up for success in life. However, in order to be able to generously give your assets away in your estate, you must ensure that they are protected correctly. In this post, we’ll explain how asset protection is a key part of your estate planning process. It is always good to speak with an asset protection lawyer, like an asset protection lawyer in Chandler, AZ, for answers to specific questions.
Why You Need to Protect Your Assets
It’s important to protect your assets in case any financially disastrous situation occurs such as bankruptcy, divorce, or judgment. You never want to be reactive in those situations because that is how you could end up losing a lot of your assets. You will want to set up an asset protection plan as soon as you acquire the assets. This will protect you from any unforeseen financial events.
You’ll also want to protect your assets for your heirs. You worked hard to build up your wealth throughout your lifetime and you want to be able to leave them something when you die. There are many different ways to protect your assets for your children or heirs, including setting up lifetime trusts or staggered distribution. Leaving a legacy for your children is a very important reason to protect your assets.
Asset Protection Strategies
While it’s completely possible you’ll never need asset protection strategies, it’s better to be safe than sorry. There are three main ways that you would most likely require an asset protection strategy — through bankruptcy, divorce, and judgment. Let’s walk through each of these categories and how you can protect yourself.
- Bankruptcy – Sometimes bankruptcy is unavoidable, but you don’t have to lose everything due to bankruptcy. Having an asset protection trust allows you to keep more than just cash in this trust. It also allows real estate, investments, and personal belongings. These trusts allow you to name a trustee who is in charge of controlling assets. This way, these items aren’t in your name and are out of reach for the creditors, and you’ll still have assets to pass down in your estate.
- Divorce – You never want your children to lose access to anything due to a divorce. A discretionary trust is a great way to protect your assets during a divorce. You can designate a beneficiary or trustee that has access to the trust and therefore protects your assets from your ex-spouse.
- Judgment – If you are a business owner and are being sued by a customer or employee, your personal assets could be at stake. You never want to risk losing your property, inheritance, or any other items in your estate to a business lawsuit. By setting up your small business as a corporation or an LLC (limited liability company), you can protect your family and personal assets from being attacked. You wouldn’t want an upset customer to affect the assets you are leaving your children in your estate plan.
When thinking about your estate planning, it’s important to remember to protect your assets now so that you can ensure your family is taken care of in case anything were to happen to you.
Thanks to Citadel Law Firm for their insight into why it is important to have asset protection for your belongings.