Category: Asset Protection

Part of estate planning is ensuring that the inheritance you pass on goes where you want it to after your death. But how can you ensure that your assets are protected long after you’re gone? Do you hope to pass on as many assets as possible? Do you know whether or not your beneficiaries could be exposed to risks that could cost them all of the assets you’ve worked so hard to build? In an increasingly litigious environment, proper asset protection planning using tools like trusts is a must. 

People focus on avoiding probate and putting together a will during estate planning, but it turns out you may need more comprehensive strategies than that. If you died prematurely, became incapacitated, are involved in a rocky marriage that suddenly ends in divorce, or are sued in the next month, all of these are potential attacks on that inheritance you’ve worked so hard to build.

One opportunity to protect this is to use an appropriate trust. This means that there is a clear set of instructions inside the trust about when assets can be removed, such as for education and medical expenses. This can help to guard against the inheritance being squandered. Many people choose a trust because it gives an additional layer of control and peace of mind in the event that you were to become incapacitated or pass away suddenly. It is critical to have a plan in place to protect an inheritance from interference from outside threats, because unfortunately, many people minimize the likelihood of these outside threats.

Inheritance is set to increase significantly in the coming years and baby boomers will now be passing on record amounts of wealth to their younger relatives. Protection is an important consideration in all of your estate and financial planning and a trust may be the most appropriate tool to help you with it. 

One of the most common reasons to include a trust in your estate plan, in addition to your will, is to protect your assets on death from being spent frivolously by children who may inherit these large sums of money without the appropriate maturity or experience to manage them properly. Trust structures are often created in wills similar to what happens in a will, in which assets are passed to chosen trustees to look after young beneficiaries.

The trustee maintains the responsibility to manage the asset and distribute to the beneficiaries when they believe that the beneficiary has personal circumstances and maturity at a high enough level to cope sensibly with a major inheritance. A discretionary trust or a life insurance trust are some of the key tools used in this process.

If you do not have an estate plan, the state will create one for you by intervening on your behalf. When you pass away, virtually all of your assets are distributed in one of the following ways. 

These can include:

• By state law or by will: Anything that isn’t distributed by beneficiary or by ownership will pass through state law. Many people believe that they don’t need a will because they will assume that their spouse will receive everything by ownership or by beneficiary. While that may be true, if both of you were to suffer in an accident together, this can raise significant questions.
• Beneficiaries: You usually will name beneficiaries on life insurance plans, health insurance, savings accounts, and retirement plans. These will pass outside of the probate system because they refer to the specific paperwork you filed directly with those account managers.
• Ownership: If your property was owned by joint tenants with survivorship, the asset will immediately be transferred to remaining surviving owners. If you own your home with a spouse, for example, the spouse will automatically get it. However, you may have other real estate interests that have not been clearly laid out in your estate plan.

You need to consult with a knowledgeable attorney who can help you navigate this process and ensure that you have considered all potential angles in putting together your estate plan.

 

 

 

Far too many people put off the estate planning process for way too long and end up leaving behind a mess for their children. This can be literally, legally or financially.

The literal type of mess is the cluttered house, when the adult child must step in to clean out a house of things that have been accumulated after a parent passes away. However, the legal and financial mess may be associated with neglecting to put together a comprehensive elder law and estate plan in the event disability or death. Many times, when a loved one suffers a devastating disability or accident that ultimately claimed their life, this was unexpected. 

Failing to do the necessary preparation to make it easier for your loved ones to take quick action can put them in a very difficult situation. Many people want their spouse, followed by their children to take over in the event of a disability.

But children or a spouse may be barred from doing so without the proper power of attorney and living will. These are also referred to as advanced directives and enable you to put other people in charge in your life and avoid the hassle of a guardianship proceeding in which a judge makes a decision about your legal guardian.

When you consider how many issues are affected by your willingness to plan ahead, you can make things much easier for your loved ones by stipulating an estate and elder law plan now that considers your needs as well as their future.

The composition of your retirement portfolio affects your ability to support your lifestyle after you retire as well as what you can give away to loved ones.

Many financial managers have recently found that retirees’ assets are in pre-tax accounts, also known as qualified plans. However, this has an additional consequence when it’s time to make withdrawals to cover your living expenses. You would need to pull out additional funds to cover the tax bill that comes with it. 

Using a bucket strategy when planning for retirement can help to address this problem. A short-term bucket that has up to five years of retirement needs should be tapped without a major taxable event.

The second bucket should be filled with long-term fixed-income assets and after-tax equity. This bucket could be very important for generating taxable events, given the appreciation of assets. However, if the principle is all after tax dollars, this burden is reduced. The third bucket should be filled with 401(k), pre-tax retirement accounts, and traditional IRA accounts.

These are all subject to RMD rules that begin at age 70 and half and the distributions are taxed at ordinary income rates. The ratio of assets in your third and second buckets is determined by whether or not you have already saved enough to achieve your lifestyle goals in retirement. If you have more resources than you expect to need for your retirement goals, the pre-tax assets might be higher and you should consult directly with an experienced estate planning lawyer to talk about how you will pass on these assets to your loved ones in the future.

 

The tax code reform framework on the table in DC does have some important ramifications for art related businesses and art collectors. The new nine-page proposal promises bigger paychecks, more jobs and a more fair tax system; however, it proposes eliminating many of the itemized deductions and lobbying groups have already become involved. 

It would lower the highest individual income tax rate to 35% from where it currently sits at 39.6%. This could have ramifications for how art collectors approach their estate planning. As of right now, collectors who have taxable estates must plan to address the estate tax on their art which is an illiquid asset. Elimination of the estate tax could alter this dynamic and motivate individuals to reconsider where will their artwork go after they pass away. The tax reform proposal, however, does not address how the tax code will manage inherited assets that have appreciated in value.

Under current law, a child who inherits something that has grown in value since the time it was purchased, would be responsible for paying a stepped-up basis of the current value, such that capital gains taxes are levied on the profit from a higher basis. The proposal also does not address whether tax rates for capital gains on art would be maintained. Taxpayers may opt to categorize the profit from selling a piece of art as ordinary income or capital gains. The highest income tax bracket currently sits at nearly 40% versus the capital gains tax of 28%.

The right lawyer can help you if you need assistance with your estate planning for an art collection.

 

As you tackle the subject of estate planning, you may have questions about what happens to excess money if you have already considered all the needs of your unique loved ones. After you have taken the necessary steps to minimize taxes and maximize the value of the assets you’re passing on to your loved ones, you will also want to contemplate what will happen to the remaining assets. 

Giving things away to charity is a worthwhile philanthropic goal and one that should be considered carefully with the help of a knowledgeable estate planning attorney. The manner in which you pass on assets to charities requires careful consideration of the intersection of your philanthropic goals and tax issues. By choosing to pass on certain assets to charities instead of others, you may maximize your tax benefits while also ensuring that the charity receives as much as possible of the assets you have carved out and set aside in your estate plan.

Your community may play an important role in your individual life and you can use your estate planning documents to further articulate what you want your legacy to be after you have passed away. Scheduling a consultation with an experienced estate planning attorney in your area allows you to walk through the various opportunities available to you and select one that is in line with your individual and community based goals.

Are you concerned that a lawsuit or other threat could jeopardize your personal finances? While some people face a higher likelihood of an incident like this, everyone should be concerned about asset protection planning. 

 

Accomplishing asset protection planning is often successful after you consult with an attorney who has experience in this area. Holding assets outright and in particular, those assets that may be exposed to serious risk like real estate investments can be a big mistake in the event that a creditor or lawsuit threatens you in the future.

 

A limited liability can be structured to hold some assets. This is often used in conjunction with the benefits of providing an orderly transfer of assets to the next generation and reducing your estate taxes.

 

So long as you respect the legal formalities associated with an LLC, you can also tap into their asset protection planning potential. A limited liability company can be extremely valuable for isolating a risky asset. If in the event that you hold real estate and an injury happens to someone on the property, your personal assets could be tapped for that. However, if the property is owned by an LLC, then the injured party is only eligible to reach the assets in the LLC.

 

Furthermore, personal creditors typically cannot reach assets inside an LLC. The creditor is limited to a charging order that entitles them to collect distributions made from an LLC to you but not the underlying LLC’s assets. Consulting with a knowledgeable asset protection planning attorney is strongly recommended.

Too many people realize that asset protection planning is valuable when it’s too late. For example, after a lawsuit is filed against a doctor or after creditors swoop in to take personal assets. This can expose your entire family, your company, and all that you have worked so hard for to serious risks, and that’s why it’s important to start asset protection planning now, even if you’re not yet sure that you need it. Putting a safeguard plan in place now makes a lot of sense, but you’ve got to be prepared by setting up an initial consultation with an experienced asset protection planning lawyer. If you face risks because of your wealth or your profession, asset protection planning is a must-do. 

Looking ahead to the future can increase your chances that your beneficiaries will be able to receive the assets that you intend. More than $59 trillion is expected to pass from baby boomers to the future generation, according to a study published by the Boston College Center on Wealth & Philanthropy. Unfortunately, however, despite these numbers, very few baby boomers have taken steps to ensure that their wealth does not disappear immediately after the transfer. Up to 70% of families lose all of their wealth by the second generation, according to data shared by the Williams Group Wealth Consultancy. 90% of families lose all of their wealth by the third generation.

There are changing needs for affluent and mature clients who are concerned about successfully transferring and preserving their wealth. Identifying an experienced attorney who can assist with the asset protection planning process and infusing various strategies such as trusts and other estate planning tools can give you peace of mind that your assets will be passed on to a future generation and protected as much as possible.

 

Have you ever heard of a domestic asset protection trust? This is a tool in which you create a trust inside a U.S. jurisdiction in order to protect the person who is putting together the trust. One aspect that makes these different is that the person who creates the trusts and put assets into it is usually a beneficiary of the trust so that that person still gets the economic rewards of the assts placed into the trust. This can also guard against outside creditor claims, a primary reason why people want to engage in asset protection planning in the first place. 

There are many different reasons why you might want to take advantage of this type of trust. First of all, if you have a high net worth, you may want to remove the assets from being so closely connected to your individual assets in the event of a creditor claim. You might also be concerned about litigation risks that could expose your assets to judgments. These are two of the most common reasons why a personal will set up a meeting with an estate planning lawyer to walk through domestic asset protection trusts. There are several groups of people more likely to be targeted in lawsuits, including attorneys, officers and directors of public companies, and doctors. Often this is part of a bigger estate planning goal and can minimize fears about your personal assets being tapped by creditors or by lawsuits.

You might also have a person in your family who you would classify as a spendthrift or a person with disabilities. These kinds of trusts can be valuable tools for orchestrating the transfer of assets while giving the creator some peace of mind and comfort in knowing that all unique concerns have been considered.

Without any advanced planning, your retirement assets do give you some protection against creditors, but it’s not comprehensive. If you want to increase your overall asset protection, you need to consult with an attorney to figure out how to boost the protection of the personal assets you have worked so hard to build.

A qualified retirement plan may be shielded from most creditors; however, it is not complete protection. A retirement plan provides you with the benefit of having a nest egg to save money for your future and most people are also aware that there is an additional benefit of qualified retirement plans that enables you to save money on taxes. However, many people don’t realize that retirement plans can also be used to, in some form or fashion, protect your assets from creditors. 

An asset protection strategy is important for all individuals and particularly small business owners. The exemption for retirement plan assets is unlimited under Federal Bankruptcy Law. This means that a small business owner may be able to protect a large deal of wealth inside a retirement plan.

Retirement funds are protected in an asset protection plan in a variety of ways, depending on whether or not the plan is qualified and subject to the Federal Employee Retirement Income Security Act. 401(k) assets, for example, are protected ERISA, but your IRA assets may not be protected appropriately unless you use a standalone retirement trust that is put together by an experienced asset protection and planning attorney.

 

Estate planning is a comprehensive process that may involve multiple professionals who can assist you with determining the right strategies for planning ahead for your future. A good financial advisor is someone that you will need at some point in your life and the estate planning process is a great opportunity to identify one if you are not working with one already. Financial advisors may have multiple different specialties but the primary idea is that they will help you to invest your money to obtain your financial goals. These goals may include minimizing your tax burden, budgeting, saving for college, retirement, debt reduction, giving to charity or even generating income in the future. 

Financial advisors may have multiple different specialties but the primary idea is that they will help you to invest your money to obtain your financial goals. These goals may include minimizing your tax burden, budgeting, saving for college, retirement, debt reduction, giving to charity or even generating income in the future.

A financial advisor can help you achieve these goals as well as the strategies behind these investment decisions so you are better informed. When working with both an estate planning attorney and a financial advisor, you’ll have a broader picture of your financial goals and what will happen to your wealth should something happen to you unexpectedly.

Identifying all of the different strategies being used and having a clearly defined structure for your investment plan will also give you a better perspective of how your retirement planning can assist you when it comes to thinking about planning for long-term care or passing on assets to your loved ones while you are still alive. It is strongly recommended that you identify both an estate planning attorney and a financial advisor who have plenty of experience in the field.

                                                                                                                                                                                           

Thinking about asset protection planning after a claim has already arisen is certainly an all too common experience. In fact, it can actually make matters much worse. It is a common misconception that a judge can simply dial things back and act as though a fraudulent transfer has never happened, leaving you protected because you took late planning steps.

Anyone who assisted in what could be viewed by the courts as a fraudulent transfer, as well as the debtor could become liable for the creditors’ legal fees and the debtor can also lose any chance of getting that debt discharged in bankruptcy. Late planning can usually backfire, which is why it is definitely in your best interests to approach asset protection planning holistically well in advance.

The best way to protect yourself is to minimize the chances of a claim before they arise. If a claim does happen, the steps you have already taken to protect yourself mean that not all of your assets are exposed to creditors or other risks. While most people don’t like to think about these challenges until they happen, it is well worth your time to view asset protection planning as something of an insurance policy that gives you some protection in the event that things go wrong in the future.

If you believe that you may have exposure to risk, you should begin the asset protection planning process immediately by setting up a meeting with a New Jersey asset protection planning attorney. The most effective way to handle this situation is to begin your planning process before any significant claim rises against you.

A claim does not arise when a judgement or lawsuit is made against you. Instead, it happens when the underlying event or the circumstance that causes the claim happens. If you suspect that you might be sued but you have not yet been sued, it could actually be too late to do asset protection planning. Many people are exposed to more risks than others as a result of being in a high-risk profession.

Contractors, paramedics, architects, pilots, physicians, entertainers, professional athletes, political figures, individuals in the public eye and high net worth individuals may all benefit from comprehensive asset protection planning. How this ultimately looks for you depends on your conversation with an asset protection planning attorney. All strategies should be aligned with your personal needs and your exposure to risk. By setting up a meeting with an asset protection planning attorney today, you will have a better idea of what to expect and how to protect yourself now and well into the future.