Asset Protection Planning
Helping Clients on Cape Cod, Plymouth and Southeastern Massachusetts
One of the most important aspects of estate planning is asset protection planning. This term describes the process of protecting your loved ones from losing their inheritance to an unforeseen divorce, lawsuit, creditor, bankruptcy, or unexpected illness. Asset protection planning is not automatic, and the issue is often misunderstood by attorney and clients alike.
One common misconception is that Trusts automatically make the beneficiaries immune to lawsuits. Another misconception is that trusts automatically shield their beneficiaries from nursing home expenses. The truth of the matter is that although Trusts are powerful instruments, they must be drafted specifically to achieve a goal. So, while it is possible to create a Trust to protect the beneficiaries from losing their share of a Trust from creditors, for instance, the Trust must be designed to do so. One should not assume that protection simply because there is a beneficial interest in a trust. Likewise, while it is possible to use Trusts to protect assets from disqualifying a Medicaid applicant, for example, the Trust needs to be created with this specific purpose in mind. Simply owning assets in a trust is not a guarantee that the trust assets will be excluded when applying for government benefits like Medicaid.
Asset protection planning is extremely important for everyone. It is not just for affluent clients. Every hard-working person could rest easier if there was assurance that their loved ones would be enjoying their inheritance and lot having it taken from them.
Many strategies are available for asset protection planning. Unfortunately, there are many misconceptions too. Some clients are unwisely told to move their assets offshore to a foreign country, or to stack cash in their home. These strategies can cause far more trouble than they are worth, and such advice ignores the substantial protections available to clients who use specially designed Trusts to get robust asset protection.
In addition to Trusts, business owners can create structures to obtain asset protection as well as tax advantages. Limiting liability for professionals and business owners is often a “stacking” strategy where trusts, corporations, limited liability companies, insurance and strategic relocation to get the desired effect.
If it is important to you that your assets be protected from those that seek to take it from your loved ones after you have passed on, please have Attorney McManus review your strategy and suggest options to make it so.