When you contemplate your estate plan, you probably focus on how you want your assets distributed after you are gone. While ensuring that your assets are distributed according to your wishes is important, it is equally important to protect your assets while you are alive and at the time of your death to ensure that there will be assets left to pass down to loved ones when you are gone. With that in mind, our asset protection planning attorney at O’Reilly Law Firm PLLC urges you to evaluate how safe your assets are and take steps to protect them within your estate plan.
Threats to Your Assets
Although you may have thought about some of the potential threats to your assets, you may not have considered all of them. Common threats include:
- Divorce. Your own divorce can clearly be a threat to your assets; however, so can the divorce of a child or other beneficiary if he/she co-mingled an inheritance during the marriage.
- Business failure. You may think you are protected from personal liability because you incorporated; however, it may still be possible to come after you personally for debts and/or liabilities of the business.
- Economic downturn. No matter how careful you are with your finances, an economic downturn could have serious consequences. If you are not careful, creditors could wind up with your assets to satisfy debts.
- Spendthrift beneficiary. Imagine leaving a lump sum to a loved one who proceeds to blow through the inheritance in record time without anything of value to show for it?
- Long-term care. There is a very good chance that you will need long-term care at some point and that care will be expensive. If you cannot afford to pay out of pocket, Medicaid will likely be the only source of assistance. Qualifying for Medicaid, however, may require you to “spend-down” a significant portion of your assets first and use the proceeds to pay your LTC expenses until Medicaid chips in and starts covering your expenses.
- Federal gift and estate taxes. All estates are potentially subject to gift and estate taxes at the rate of 40 percent above the lifetime exemption limit.
How Can Asset Protection Planning Help?
Incorporating asset protection tools and strategies into your comprehensive estate plan can go a long way toward anticipating and protecting your assets against common threats. Common asset protection tools and strategies include:
- Signing a prenuptial agreement. If you have children from a previous relationship and or there is a significant disparity in wealth between you and your spouse-to-be, consider a prenuptial agreement.
- Protecting assets from in-laws. To protect against an son or daughter-in-law ending up with your hard-earned assets, use a family limited partnership or a trust to pass down family assets to adult children.
- Removing assets from the reach of creditors. Create an irrevocable living trust to hold valuable assets during your lifetime and keep them out of reach of creditors.
- Controlling how gifts are used. If you have a beneficiary with a substance abuse or gambling problem, or who is simply not good with money, do not hand down a lump sum inheritance. Instead, try using a trust that can control the assets and the disbursements.
- Planning for nursing home care. Include Medicaid planning in your estate plan. For many seniors, the single largest expense they will have during their retirement years is the cost of LTC. Because you may end up turning to Medicaid for help with those costs, it is always best to think ahead and include Medicaid planning in your comprehensive estate plan now.
- Tax avoidance. To make sure your estate doesn’t lose assets to Uncle Sam, incorporate tax avoidance strategies into your estate plan now. For example, start using the annual exclusion to make tax-free gifts each year while you are alive.
Are Your Assets Safe? Contact Our Office For Help
For additional information, please join us for an upcoming FREE seminar. If you have questions or concerns about how your assets may be at risk and how to protect them, contact our experienced Staten Island asset protection planning attorney at O’Reilly Law Firm PLLC by calling 332-456-0500. After we help you, you will never have to answer as to whether or not your assets are safe – because they will be.
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