Asset Protection Planning: What is It and Why is It Important?

Asset protection planning is a process that includes a variety of methods to do one simple thing – protect your assets from creditor claims down the road.

As an individual and possibly as a business owner you have collected assets over the years with the ultimate goal of living well in the future and, if applicable, passing something on to your heirs. Unfortunately you never know what’s going to occur down the road. You may find yourself in a position where creditors choose to file claims against you. If these claims turn out to be legitimate, the assets you have built up over the years may be in danger.

Because the future is an unknown, there are steps you can and should be taking right now to protect these assets. If you wait until a claim is filed against you it may be too late to protect your assets.

Some of the strategies you can take now to protect your assets in the future are obtaining the proper insurance, titling assets appropriately, creating a retirement plan, and structuring your business assets correctly.

Start with insurance – the simplest and most common form of asset protection. Auto, home and life insurance are basics. But you should also consider other types of insurance, including malpractice (if it’s appropriate for your work), fire, casualty, liability, personal umbrella and, if you are running a business, officers and directors liability insurance.

As far as titling an asset, you can consider having the majority of family assets in someone else’s name – a spouse or some other trusted relative. An irrevocable trust is another possible asset owner. As you might suspect, retitling assets in someone else’s name or some entity name should be carefully considered.

Retirement plans, including 401ks, IRAs and other methods are excellent ways to protect your income and assets. Inherited retirement assets are not necessarily protected from creditors of the beneficiary who inherits those assets however. There are ways to protect retirement assets in the hands of beneficiaries as well.

If you own a company, how that company is structured can help you protect you and your business from creditors. The options include different types of corporations, a limited liability company or some combination.

This is just a sampling of some of the things you can and should be doing to protect your assets. One thing is certain. It is an extremely complicated process – one that you should not consider doing without some legal guidance. I would be glad to help guide you through these critical and necessary procedures.

The Complexities of Estate Planning: Part Two

A few weeks ago, I wrote here that one of the biggest challenges to estate planning is simply understanding some of the terms involved. In that article, I offered some basic definitions of the following terms:



Estate Tax


Here are a few more terms that are very common in any discussion of estate planning.

Trust – A trust is a relationship that has one person, who is known as the trustor or grantor or settlor, giving another person, the trustee, the right to hold the trustor’s assets or property for the benefit of another person or people – referred to as the beneficiary. The most common reasons to create a trust are to reduce estate tax liability, to protect property in your estate from creditors, avoid probate and, perhaps most importantly provide for beneficiaries, minor children for example, who would not be capable of managing or take care of assets on their own. Another major benefit of creating a trust is to have in place a way that you can be protected and provided for if you were to become incapacitated so that you are unable to handle your own affairs

Living Trust – A living trust, which can also be referred to as an inter vivos or revocable trust is the legal document that holds your assets into a trust during your lifetime once those assets are transferred from you to your trust. Those assets can be managed by a successor trustee for you if you become unable to handle your own affairs or can later be transferred to designated beneficiaries at your death by your chosen representative – the trustee. The term revocable means you can change the terms of the living trust or just get rid of it at any time.

Health Care Surrogate Designation – Also referred to as an advance directive, this is a document that enables you to state your wishes regarding end-of-life medical care, in case you are no longer capable of communicating your desires. You name a designee whose responsibility is to see that your medical care is based on your wishes.

Living Will – A Living Will is an expression by you of your wishes regarding end of life care in the event you are unable to make those decisions for yourself.

Will – Probably the most common if not fully understood legal document related to estate planning. With a will, you express how your property should be distributed at your death. It names a person called an executor or personal representative – to manage your estate until final distribution is completed.

One major misconception I hear over and over again regarding wills is the idea that “if I have a will, I don’t have to go through probate.” That is simply not true. There are ways to avoid probate but doing a will is not one of them.

Discussing estate planning with your family is often challenging on many fronts. Probably the biggest hurdle is simply not wanting to talk about your mortality. But, as I have seen over the years, a simple understanding of these and other terms can often make that conversation much easier.

I will continue exploring other terms in future writings in order to help make that conversation easier for you. And, as always, if you need to discuss some of these concepts, I will be glad to help.  Whether you currently have a plan and wonder if it needs to be reviewed and updated or if you know you need to get a plan in place but just don’t know where to start, I am available to answer questions you may have in a brief meeting with no obligation on your part.  Please be aware I cannot have such initial consultations over the telephone or via email.

Estate Planning: Don’t Procrastinate

“I know I need to get my estate planning done. I’m just not ready.”

I hear that or something very similar to it regularly. There are a lot of reasons why people are not getting their estate planning done. But frankly, I think of them more as excuses rather than reasons.

Here are some of the most common excuses I hear from people who are putting it off.

  1. I’m not old enough. My response to that is what is the right age? If you had some guarantee that you were going to live a certain number of years, this might be valid. But unfortunately, none of us have that guarantee.
  2. I don’t have enough assets. This couldn’t be more wrong. Estate planning is not just for the wealthy. The cost for court guardianship and probate may actually come to a greater percentage of a smaller estate than it does from larger ones. You may not own a lot but without estate planning, what little you have could end up with the court and attorneys rather than your loved ones.
  3. It’s too confusing. I can’t argue too much with this one because it’s true that estate planning is complicated. That’s why you need to go through the process with a qualified estate planning attorney.
  4. I don’t want to think about who should get what. This is a challenging issue. If there are multiple children, it may be a good idea to talk to them. You may be surprised about what you hear.
  5. I just don’t want to think about it. This is a sensitive issue. No matter how you frame it, this is a discussion about what happens after you’re gone. It’s not a pleasant thing to consider.

The problem with letting these and other excuses get in the way is that you are creating greater problems by ignoring estate planning. Here are some of the reasons why you should not procrastinate.

  1. Clarifying your wishes. Any estate planning documents should include a will, a living will, durable power of attorney and more. These documents not only explain how you want your estate divided but also explain how you want to be cared for and who should make decisions if you are not able.
  2. Keeping peace in the family. If this planning is completed, you don’t face the risk of a sudden death without it. The result of that could be family arguments and battle, along with the complications of probate.

So while estate planning is something that people tend to not want to deal with, there are plenty of good reasons to start early and get it done. The reality is that nothing you do now is set in stone. If circumstances change, the estate planning can change with them.