All of us have the need to protect our assets; after all, we’ve worked hard for what we have and we want to be sure there’s something left after we’re gone. Asset protection planning is simply the effort of protecting what you’ve worked for from potential creditors. Don’t mistake the intent: it’s not about hiding assets to avoid paying taxes, nor is it fraudulent or illegal. Instead, it’s about covering your financial bases.
These days, it’s increasingly difficult to maintain those assets you’ve worked for. From the high rate of divorce, to the recession that still lingers, there simply are no “sure solutions”. Never before have there been such threats to individual wealth. Gone are the days when estate planning was covering the bases for our assets to go to the beneficiaries we choose. It’s all about survival – and for many, that means reaching into those assets we thought we would pass down to the next generation.
Asset Protection Game Plan
By putting a solid asset protection game plan into place, you’re covering the bases for the next generation, easing your own burden moving forward and minimizing your taxes in the process.
At a minimum, you’ll want to ensure you’re taking advantage of every tax benefit that’s available. A solid estate planning lawyer can help you go about the business of covering those bases. He can let you in on opportunities you may not know even existed. There are many ways to ease the tax burden for your heirs after your death, too.
The applicable exclusion amount, or unified credit, can help shield various properties from high taxes. Each year, the numbers vary in terms of how much is excluded. It’s a great way to pass property through the generations without worrying about burdensome taxes with each passing.
We never know what the future holds, but there’s a chance most of us will find ourselves in need of a nursing home. When you set up the right trusts, you’re ensuring long term care doesn’t annihilate your estate. Because most of us don’t even consider these types of insurance policies when we’re young, we wait to buy them until we’re nearing retirement. At that point, the policies are often cost prohibitive. Medicaid then becomes the reality and with that, the spend down and 5 year lookback – both of which mean you’re forced to surrender your assets.
An irrevocable trust ensures creditors can’t take your assets and can help protect you should Medicaid become a reality. Individual healthcare policies are often woefully short anyway, but the addition of Medicaid simply changes everything. This process allows you to qualify for coverage while also keeping in place the assets for your heirs.
Own a business or investment properties? You can work with your estate planning lawyer to place those assets into an LLC, S-Corp or limited liability partnership. You’re afforded protections with the limited liability status as well as beneficial tax benefits.
It can also keep the dangers of lawsuits away from your personal wealth. If you own a rental property and it’s classified as an LLC and a worker is injured on that property, if you’re sued, the judgment affects only the assets in the LLC – your personal assets are safe.
These are just a few of the estate planning tools available. Meet with your estate planning lawyer for information on your unique needs to ensure your personal bases are covered.
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