There are many reasons why virtually every adult should have a comprehensive estate plan. People create them to ensure their assets are distributed according to their wishes after they pass away, and they also can protect their assets from creditors, lawsuits, or even divorce. Before you meet with your attorney, it is important to recognize that several asset protection strategies are at your disposal. Although legal counsel will develop the plan that aligns with your long-term goals, each of the strategies we raise here can be starting points you discuss.
Trusts & Asset Protection
Trusts are legal entities that can be used to hold your assets. That said, it is critical to understand that there are different types of trusts with distinct advantages and disadvantages. Before we continue, don’t be quick to dismiss trusts because you assume they are only for extremely wealthy individuals. These estate planning tools can be used and formed by anyone for various purposes—including asset protection.
Furthermore, they are extremely effective at doing so. They stand in contrast to common tools such as wills that do not protect your assets, nor can they hold them. The power of trusts resides in conjunction with changing of title. You can title your assets in the name of the trust, which is why those who choose to create them do not have to be concerned with probate. Probate occurs in the absence of a trust or an estate plan. Probate will also be required when the deceased leaves a will. The court will oversee paying back creditors and ensuring your assets are passed through proper title changes to designated beneficiaries. Because this happens when you form a trust, it eliminates the need for probate.
Two primary forms of trusts are commonly used for asset protection: revocable and irrevocable. Revocable trusts can be changed or terminated by the trust’s creator. You can even assign yourself as the trustee so that you can access the assets contained within it. In this regard, you still maintain control over your assets. Although this is a tremendous advantage, it will not be an effective form of asset protection. The assets in a revocable trust are still considered yours, meaning creditors will have access to them.
Regarding trusts with the best form of asset protection, look at revocable trusts. These, too, are legal documents that effectively transfer ownership of your assets. The key disadvantage is that you no longer have control over your assets. Although your creditors cannot access them, neither can you. Though we mentioned that trusts are for everyone, you and your attorney need in-depth conversations about the ramifications of creating one. For example, can you live without access to the assets to place in the trust? Anyone can create a trust, but that doesn’t mean each type will align with your long-term goals.
Meet with Luis E. Barretto & Associates
If you have further questions about trusts and their relationship with asset protection, it is essential to speak with an estate planning attorney. During this time, you will outline your circumstances, so they can help you understand the different types of trusts and how they can accomplish your unique wishes. To speak with an attorney, contact Luis E. Barreto & Associates to schedule your free consultation today.
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