Many of our clients start with what we call a living trust or a revocable living trust. But is that enough?
While these trusts are great for their intended purpose, they do not offer true asset protection. Contrary to popular belief, you will not be protected simply because your assets are in a trust. Instead, your trust will work exclusively for its intended purpose, to avoid probate. Thus, in order to protect your assets from threats such as creditors and lawsuits, you should consider an asset protection trust.
An asset protection trust is an irrevocable trust, allowing you to remove the assets from your ownership and therefore protect them from creditors. However, this is also one of the main drawbacks because once assets are transferred into the trust, you cannot change your mind.
So, you may be thinking, “well then I’ll just transfer my assets to a loved one instead.” Be careful! It’s a common mistake to simply give away your assets because it can make problems for you in the long run. Not only are gifted assets at a high risk for threats like divorce or creditors, but giving away your assets can also affect your Medicaid eligibility. In fact, gifting can make you ineligible to receive Medicaid benefits for months or even years.
Remember, your estate plan should not only protect you and your spouse from threats such as long-term care costs, creditors, but it should also be able to secure your heirs’ inheritances against any additional threats after you’re gone. For example, some children may need protection from making poor decisions in the event they are not mature enough to manage their inheritance on their own at the time of your passing. Even your grandchildren may need protection in the event that your child passes away and your in-law remarries.
Our planning process will help you create a holistic plan that brings you peace of mind by detailing how you and your family will be cared for during any periods of incapacity in the future. We use a combination of proven tools and strategies to protect our clients’ assets. Together, we will take all necessary steps to plan ahead, before you risk depleting your savings or the assets you are planning to leave your loved ones.
Susana Lannik, of Lannik Law, LLC, is an experienced attorney who can help guide you every step of the way and ensure you are able to protect as much of your portfolio as possible. If you have questions about protecting your assets, we’re here to help.