Updated: Jun 24, 2021
How can I protect my assets from the government, from long-term care spenddown, and from other threats?
Asset protection is an important part of estate planning, which typically involves two different goals:
(1) protecting assets from one’s own threats, during lifetime
(2) protecting assets from the threats of your beneficiaries, after your death
Asset protection is typically done through good trust planning. This is a complicated part of estate planning which requires a professional who is well-equipped to handle the specific details of asset protection. In many cases, this involves the creation of a trust. There are various types of trusts, but your attorney will design the right trust to meet your needs and accomplish your personal goals.
Asset protection for one’s own self is typically done through an Irrevocable Income Only Trust with a right to income. The person creating the trust can serve as the primary trustee, and will maintain the authority to remove, replace, and appoint other trustees. It is important to know that there is a five-year lookback that is part of the planning process when focusing on requirements for Title 19.
Asset protection for beneficiaries is typically accomplished through “subtrusts” for beneficiaries instead of outright distributions. Again, there are various aspects to this type of planning to ensure the beneficiaries are truly cared for properly and effectively.
Although not commonly connected with asset protection, the topic of tax planning should also be considered. Creating an effective estate plan will also help you preserve more of your assets and give less to the government. Tas planning is not commonly associated with asset protection, but it can play a significant role is preserving more of your wealth. In some cases, this can incorporate charitable giving as a way to enhance your overall plan.
This topic can get heavily into details about trusts, and that can be complicated. Check back next month as we discuss the topic of trusts in more detail.
Until then, remember that we do this because it is your life, it’s your plan, it’s your legacy.
If you would like to get started on your own estate plan, contact me at firstname.lastname@example.org or 262-677-4051.