Asset protection planning is a way of protecting your assets through legal means against creditors and lawsuits. It is often associated with estate planning, but asset protection planning goes much deeper than an estate plan that outlines how your beneficiaries handle your estate after you die. If you work in a high-risk occupation, such as a doctor or in construction, that could put your home and other investments in danger against a lawsuit, an asset protection plan may help you avoid losing everything.
Reasons You May Want an Asset Protection Plan
An asset protection plan is a complex legal vehicle that are only permitted in certain jurisdictions in the United States. Although the most common reason people set up these protection trusts is to protect assets against seizure, some asset protection plans can reduce or even eliminate state income taxes. Some people use asset protection plans in place of a prenuptial agreement. If you have your assets in an asset protection trust before you get married, those assets may not be distributed as community property in a divorce, but you should always check with your attorney to make sure that your plan is set up in accordance with local laws.
What Type of Lawyer Can Set Up an Asset Protection Plan?
Estate planning lawyers have traditionally been the ones who would delve into asset protection plans, but any planner must be familiar with many different types of law, from bankruptcy to foreign investments. There isn’t one right way to set up an asset protection plan, but there are many wrong ways. Asset protection plans must be set up securely under the legal guidelines. Asset protection planning is not hiding assets or evading taxes. You can’t use asset protection to defraud your creditors.
What Should You Be Aware of When Setting Up an Asset Protection Plan?
An asset protection trust needs to be set up before you have problems with creditors or lawsuits. An asset protection trust is irrevocable. You can be the beneficiary, but typically, you will have to deal with complex regulatory requirements. An independent trustee has discretion over distributions and investments. You may not be able to control your own assets as much as you could before.
What Type of Estate Planning Fits Your Needs?
It’s important to discuss your future goals and current situation with your estate planning attorney to know what type of estate planning fits into your lifestyle. Make an appointment with a lawyer, today to protect your assets.