When you think about estate planning, you likely focus on decisions surrounding the division of your estate assets when you are gone and the desire to provide for loved ones with those assets. Your estate plan, however, should do more than simply create a roadmap for the distribution of your estate assets. It should also include strategies for growing and protecting those assets over the course of your lifetime. In fact, without incorporating asset protection strategies into your estate plan now, you might not have any assets left to pass down when you die. To help you get started protecting your assets, Lincolnshire asset protection attorneys offer tips.
Are Your Assets at Risk?
Before discussing ways to protect your assets, it helps to learn some of the many ways in which those assets could be at risk. Some of the potential threats to your assets are fairly obvious while others you may never have considered.
- Divorce – your own divorce can clearly be a threat to your assets; however, so can the divorce of a child or other beneficiary if he/she co-mingled an inheritance during the course of the marriage.
- Business failure – you may think you are protected from personal liability because you incorporated; however, it may still be possible to come after you personally for debts and/or liabilities of the business.
- Economic downturn – no matter how careful you are with your finances, an economic downturn could have serious consequences. If you are not careful, creditors could wind up with your assets to satisfy debts.
- Spendthrift beneficiary – imagine leaving a lump sum to a loved one who proceeds to blow through the inheritance in record time without anything of value to show for it?
- Long-term care – there is a very good chance that you will need long-term care at some point in time and that care will be expensive. If you failed to plan ahead, and cannot afford to pay out of pocket, Medicaid will likely be the only source of assistance. Qualifying for Medicaid, however, may require you to “spend-down” (sell) a significant portion of your assets first and use the proceeds to pay your LTC expenses until Medicaid chips in and starts covering your expenses.
Tips for Protecting Your Assets
The best way to protect your assets is to understand the potential threats and to be proactive in preventing those threats from materializing. The following tips may help:
- Enter into a pre-nuptial agreement if you are marrying for the second, or subsequent, time. It does not mean you are contemplating a divorce before you even get married. Instead it means you already know what will happen to assets if the marriage ends in divorce.
- Use a family limited partnership or a trust to pass down family assets to adult children. Doing so protects them from a divorcing spouse.
- Create an irrevocable living trust to hold valuable assets during your lifetime and keep them out of reach of creditors.
- Be objective when considering gifts for loved ones. If you have an adult child (or other beneficiary) with a substance abuse or gambling problem, or who is simply not good with money, be realistic and admit the potential problem – then make sure you do not hand down a lump sum inheritance. Instead, try using a trust that can control the assets and the disbursements.
- Prepare for LTC costs by including Medicaid planning in your estate plan. For many seniors, the single largest expense they will have during their retirements years is the cost of LTC. Because you may end up turning to Medicaid for help with those costs, it is always best to think ahead and include Medicaid planning in your comprehensive estate plan now.
- Consult with an experienced Illinois estate planning attorney. Asset protection is one of the most common estate planning goals. An experienced estate planning attorney can evaluate your estate in an effort to identify potential threats and then develop a strategy to combat those threats.
Contact Lincolnshire Asset Protection Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to incorporate asset protection into your estate plan, contact the experienced Lincolnshire asset protection attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.