Wednesday, May 31, 2017
An unfortunate characteristic of American society is a proclivity for litigation. This inclination makes asset protection planning a key component of any estate plan. Under federal law and in some states, there are certain asset classes that are protected from claims by creditors. These include retirement accounts, some real property, life insurance policies, and 529 plans. This list is not all-inclusive, but its limited nature reveals that few exceptions exist for protection from creditors.
There are some simple defensive means for an estate planner to suggest or a client to use to protect their assets. First, buy insurance. Making sure to have adequate insurance protection is an important means to shield assets. Another simple step is to transfer valuable assets to a less risky spouse. This rests on the foundational premise of there being a solid marriage, as this arrangement may be problematic in a divorce. Planners might also suggest the use of an LLC, spendthrift trust, domestic asset protection trust, or an offshore asset protection trust. While there a number of methods to protect personal assets from litigation, the important point is to get it done now as opposed to scrambling for advice after a suit has been filed.
See Virginia S. Carter, Asset Protection Planning Steps You Should Consider Now, Ward and Smith, P.A., May 26, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.