For many people, the primary purpose of creating an estate plan is to ensure that the assets they spent a lifetime acquiring are passed down to their children when they are gone. If this applies to you, it is imperative that you recognize the need to protect those assets throughout the course of your lifetime so they remain a part of your estate at the time of your death. To help you, the asset protection attorneys at Hedeker Law Ltd. explain how to protect your children’s inheritance now so it can be passed down later.
Estate Planning Goals
Although every estate plan is as unique as the individual who creates the plan, there are some fairly common estate planning goals. Chief among those is the desire to create a roadmap to be used to pass down estate assets to the beneficiaries of your choosing. Without an estate plan in place, the Illinois intestate succession laws will dictate what happens to your assets following your death. Like most people, you probably don’t like the idea of the state deciding who will benefit from your hard work and wise investments. If you plan to pass down the majority of your assets to your children, the desire to provide for them and make their lives a little easier is also likely a strong incentive for creating an estate plan. The success of the estate plan you create, however, will depend on many factors. One of those is how well you protect your estate assets while you are still alive. The most well thought out and thorough estate plan imaginable won’t help you achieve your goals if there are no assets left with which to fund the plan.
Common Threats to Your Children’s Inheritance
Over the course of your lifetime you likely face a number of financial struggles if not downright poverty at some point in time. You probably never stopped to think about it, but the financial obstacles or hurdles you face during your lifetime also create a threat to your children’s inheritance. If you are forced to file for bankruptcy protection, for example, assets that might have been passed down to your children. By the same token, if you lose assets to a spouse in a divorce, those assets will also be lost to your children. The threats to your children’s inheritance are everywhere and it is up to you to see that they do not diminish the inheritance you leave behind for your children.
Asset Protection Strategies and Tools
Realizing the need to protect your estate assets is half of the battle when it comes to preserving them for your children. There are also some common asset protection strategies and tools you may also choose to make use of, including:
- Irrevocable trust – assets transferred into an irrevocable trust are legally removed from your estate and become trust property. This means they are outside the reach of creditors and other threats to your assets.
- Business succession planning – if you own a business, incorporating business succession planning into your estate plan ensures that your children (or other designated beneficiaries) will receive the fair market value of the business if something happens to you or that the business will successfully make the transition to the next generation.
- Pre-nuptial agreement – if you divorce and re-marry, a pre-nuptial agreement can protect the assets you wish to pass down to your children in the event of a divorce.
- Long-term care planning – LTC expenses can deplete your estate assets in record time if you failed to plan for the possibility that you will need LTC. Medicaid planning is often the key to protecting an estate from the high cost of LTC.
- Lifetime gifting – finally, it often makes sense to start gifting assets to your children while you are still here. Using the annual exclusion, for instance, you could gift up to $14,000 worth of assets each year to each of your children without incurring federal gift and estate taxes.
Contact Asset Protection Attorneys
Please feel free to download our FREE estate planning worksheet. If you have questions or concerns regarding asset protection in Illinois, contact the experienced asset protection attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.