Even the best-written will not go far enough to ensure that the beneficiaries receive what you intended. Finding asset protection strategies is key to preserving your wealth so it can be passed on as well as benefit you today. Proper asset protection planning will shield your assets that might be vulnerable to certain legal judgments or claims by creditors.
A crucial part of drafting an estate plan is to preserve most or all the assets ahead of time so that they are not lost through probate, judgments, creditor claims, or to other challenges such as from a former spouse.
Protecting What’s Yours
Estate planning is something that needs periodic review to ensure that it is up to date according to current state and federal laws. It’s important to be proactive with your estate plan, review it every three to five years with your estate planning attorney, and make updates when needed.
If you’ve married, remarried, welcomed a child or grandchild, or had other changes in your life that necessitate an update, it’s time to review your estate plan. You want to make sure that the beneficiaries are exactly who you intended.
Strategies For Asset Protection
Common methods of asset protection include:
• Forming Corporations, Limited Liability Companies (LLC) and Limited Partnerships (LP) means your assets are owned by one of these business structures, not you. A creditor can only attempt to access the business assets and not those that are personally owned by the entity’s executives. An LLC or other corporate entity can help preserve many assets, but not all, and may not be ideal for every situation.
• Transferring ownership to someone else may work in some circumstances, but not all. Once an owner transfers an asset, the new owner is free to do whatever they like with it. In the case of real estate, transferring a house to a spouse or child could become complicated if a) you and your spouse divorce, or b) your children decide to sell the property or lose it in a divorce of their own. However, fraudulent transfers and other methods of hiding assets are generally illegal.
• Asset Protection Trusts (APT) are a type of irrevocable trust that can protect your assets from lawsuits and creditors. Considered the best option for preserving assets in an estate plan, they can be domestic or offshore trusts. Those who fund the trust with assets are no longer the owners but “beneficiaries that hold equitable interest.” The assets are then protected from creditors and aren’t considered “tax evasion.”
But the trust cannot be overturned or changed since the owner or owners gave up ownership when they added the assets into the trust. This trust may help lower estate taxes and decrease the number of funds in the estate that is subject to probate and is the safest of the three methods.
Before committing to any specific strategy, consult an experienced asset protection attorney to discuss your assets, your options, and if an asset protection trust would work for you and your estate.
Contact a Chicago Asset Protection Attorney Today
With the help of Chicago IL asset protection attorney James C. Provenza, you can receive industry-leading legal counsel and advice to make sure that the necessary asset protection strategies are in place.
As a CPA as well as a lawyer, attorney Provenza offer exceptionally informed assistance in areas where tax planning and law intersect, especially:
- Funding and operating non-profit organizations
- Planning and administering estates