When you have worked hard to acquire a respectable asset portfolio, shouldn’t you work just as hard to shield those assets from potential dangers? Clearly, the answer to that question is “yes.” The challenge is that most individuals do not understand the several, varied ways in which their assets might be at risk. Now is the time to find out more about those threats. A detail-oriented lawyer at Morrison Law Group, PLC can explain protection strategies that can help safeguard the assets you have worked so hard to earn.
Potential Threats to Your Assets
In today’s litigious society, you are most likely aware of the danger a lawsuit can present to your assets. Whether the lawsuit is based on lawful allegations or entirely frivolous claims, and whether you win or lose, you will almost certainly use considerable resources defending the allegations. A lawsuit, however, is NOT THE ONLY possible threat to your assets. Take into consideration the following ways in which your assets may be at risk:
Divorce — once you enter a marriage you do so with the faith that you and your soon-to-be spouse will be together forever. If this does not come to pass, the marital assets will be divided. If you neglected to protect the assets you brought into the union, you risk losing them in the divorce.
Business debts and liabilities — people frequently believe that forming a corporation insulates them from any personal responsibility for the debts and obligations of the business enterprise. However, that is not always the situation. Creditors may be able to “pierce the corporate veil” and stake a claim on your personal assets.
Kids (and other beneficiaries) — occasionally, the biggest threat to your assets are the people you leave them to after your death. A spendthrift beneficiary can squander your hard-earned assets in a very short period.
Long-term care — if you require long-term care during your “Golden Years” the cost of the care could quickly deplete your assets if you failed to plan ahead given that neither Medicare nor most private health insurance programs will pay for LTC expenses. The average annual cost of LTC care nationally is over $80,000.
Estate taxes — Estates are subject to federal gift and estate taxation at the rate of 40 percent. If the combined value of all lifetime gifts and assets owned at the time of your passing exceeds the current lifetime exemption, your estate may lose a considerable part of its value to Uncle Sam if you neglected to properly plan.
What Can You Do to Protect Your Assets?
Recognizing the numerous and varied possible threats to your assets is only part of the equation. Some of these strategies are simple to understand and implement, while others are complex planning concepts that require the expertise of a professional. The key to protecting your assets is knowing which strategy works best to guard against a specific threat. This is where an experienced, board-certified estate planning attorney can help.
The estate planning and business succession planning lawyers of Morrison Law Group, PLC, can help you understand and implement asset protection tools and strategies within your estate plan. We advise and represent business owners in New Orleans, Metairie, Lafourche Parish, and throughout southeast Louisiana. To discuss your goals and concerns, contact our law firm today. We can assess your specific situation and customize a plan that meets your needs.
It may also be helpful to learn more about some commonly used assets protection tools and strategies, such as:
Pre-nuptial agreement – in times past, the mere mention of a pre-nuptial agreement would send a soon-to-be bride/groom packing. However, with second (and subsequent) marriages now the norm, it is commonplace for future spouses to enter into a pre-nuptial agreement to make certain the assets they bring into a marriage remain available to pass down to pre-existing children. A word to the wise though – make sure you do not commingle separate assets as this can turn them into marital assets regardless of the terms of a pre-nuptial agreement.
Transferring title – sometimes, protecting assets from creditors or lawsuits can be as straightforward as transferring the asset out of your name to a spouse or to adult children. Be cautious though that doing so does not amount to a fraudulent transfer.
Irrevocable trusts – once assets are transferred into an irrevocable trust, they become trust property. This means they are no longer owned by you. If you do not own the assets, no one else can get to them to fulfill debts or claims if the transfer into the trust was not dishonest.
Forming the right type of business entity – although a true corporation does defend the shareholders (owners) from personal liability, forming a corporation does not at all times work as people expect, nor is it always the right choice of legal entity for business succession purposes. Occasionally other entities may offer a safer fit, depending on your state law and your particular goals.
Medicaid planning – because Medicaid uses a five-year look-back period, transferring assets when you realize you need to meet the requirements for Medicaid won’t work. What will work is the inclusion of Medicaid planning strategies in your estate plan long before the need for Medicaid eligibility arises.
Lifetime transfer of wealth – planning for the impact of gift and estate taxes should start long before your passing. One strategy is to transfer as much wealth as possible during your life to lessen the value of your taxable estate at the time of your death. Other strategies involve spending the value of your assets through decanting.
The safest way to ensure your assets are safeguarded and remain available to provide for loved ones after you are gone is to work closely with an experienced, board-certified, estate planning attorney to integrate an asset protection component into your estate plan.
Learn More. Contact Us Today.
For more information or to schedule a consultation with a business planning attorney, call 504-831-2348 or contact us online. Our office is conveniently located in Metairie at the foot of the Causeway Bridge, we advise and represent clients on the Southshore and the Northshore.