Thorough & Aggressive Advocacy For All  Your Legal Needs

Do you know the necessary steps for asset protection planning?

On Behalf of | Jun 3, 2021 | Estate Planning |

Estate planning is not just about leaving a record that you want your family heirlooms to go to one child and your vehicle to go to another. It can also be about recording your medical wishes in case of incapacitation, reducing your tax liability or helping you qualify for Medicaid when you get older or need to live in a nursing home that you can’t afford.

Asset protection planning can also be an important part of estate planning. It is a process in which you protect your assets from private creditors and from Medicaid recovery programs. Unless you plan ahead, creditors could lay claim to all of your property and even your home after you die, leaving no inheritance for your loved ones. What does asset protection planning typically involve?

Create an inventory of your assets

To successfully protect your assets, you first have to identify them to create a workable strategy. Different assets may require a different approach for optimal protection. In some cases where assets will only be vulnerable after someone’s death, planning for the immediate transfer of ownership might be a smart move.

Holding title to real estate as joint tenants with rights of survivorship or adding transfer on death designations to certain accounts can exclude those assets from the probate process and creditor claims. Your relationships and estate planning goals will also influence which approach to protecting assets is best. Knowing what you have and the approximate value of your overall estate can help you better determine what steps to take next.

Change the ownership of certain assets

By legally changing the ownership of certain assets, you can make it much harder for creditors or even state Medicaid recovery efforts to come after your assets when you die. For some people, the simplest way to change ownership is to create a trust.

Using assets to fund a trust means that they aren’t your direct property anymore and therefore won’t have to pass through probate court, which makes them vulnerable to creditor claims. Instead, the trustee can distribute these assets to others according to your wishes or maintain the property for beneficiaries to access later.

For some people, a trust may only be part of the solution. They may choose to make gifts for their family members to reduce what assets they hold in their own name. Looking at what property you own and what you would like to do with it can help you adequately plan to protect assets and maximize your legacy at the end of your life.

FindLaw Network