Because you don’t know what the future holds, asset protection is a great way to make sure you will have money for your retirement and still be able to leave an inheritance to your children. Asset protection can protect you from creditor judgments and lawsuits.
First, you must evaluate what your estate is worth and which of your assets need to be protected. Every item you own and every bank account that you hold is either exempt or non-exempt. When an asset is exempt it cannot be taken to settle a creditor debt or other lawsuit. The asset protection process focuses on converting non-exempt items to exemption items.
Protect Your Retirement
If you do not preserve your retirement funds and your home, your later years may be affected. A creditor can place a lien upon your home that will be collected when you sell. Many retirees choose to sell their homes and move to smaller homes or even assisted living facilities and sometimes have no choice, but to move to a nursing home. The lien on your property could affect your retirement nest egg.
Some of your retirement accounts may offer a degree of protection from creditors. For those accounts that do not offer full protection, speak with your attorney about the best way to protect those funds.
Once you have protected what you need for your lifetime, you can focus on inheritance asset protection for your family. Irrevocable Trusts and Family Limited Liability Companies are two ways to protect the assets your members will inherit from your debts and from their own debts. You can even offer family members permanent protection against ex-spouses through Lifetime Trusts.
Asset protection should be a major part of your estate planning process. Don’t wait to protect what you have, or it may be too late. You cannot protect an item after you already have a creditor judgment or lawsuit pending. To do so is illegal, and the item may be taken anyway.