The average person spends a lifetime working hard to amass enough assets to live comfortably during retirement and have something left to pass down to children and other loved ones at the end of their life. If this describes you, it is important that you understand the need to protect the assets you have already acquired and will acquire in the future. Although you may be aware of some common threats to your assets, there are likely other threats of which you are unaware. One way you may be able to protect your hard-earned assets is by incorporating Lincolnshire asset protection trusts into your comprehensive estate plan.
Are Your Assets Safe?
Working to protect your assets from potential threats is just as important as working to acquire those assets in the first place. Of course, the first step in protecting your assets is knowing how those assets might be at risk. Some common threats to your assets include:
- Divorce – a divorce could seriously threaten your assets if you do not make a conscious effort to protect them. All states acknowledge separate property in some form, usually defined as assets owned prior to marriage or inherited during the marriage. What many people do not realize, however, is that co-mingling separate property can convert it to marital property. In addition, income derived from separate property is often considered marital property. Anything considered marital property is fair game for division during a divorce unless you took steps to protect it before the marriage.
- Spouse – did you know that you could be held liable for debts of your spouse? Did you know that jointly held property could be lost because of a spouse’s debts or liabilities? There are ways to insulate yourself from spousal liability and to title property so that it is not at risk; however, you must make a conscious effort to take these steps.
- Marriage – not your marriage – the marriage of a child. The inheritance you leave to a child could be lost in his/her divorce or squandered by his/her spouse if you don’t protect against the possibility.
- Business liabilities – contrary to popular belief, incorporating a business does not always shield you from personal liability. “Piercing the corporate veil” could put your personal assets at risk for debts or liabilities of a business you own or in which you have an ownership interest. Careful business succession planning can help.
- Long-term care –you, or a spouse, may need long-term care when you enter your retirement years. The cost of that care could drastically diminish the value of your assets if you did not include Medicaid planning in your estate plan ahead of time.
- Beneficiaries – a spendthrift beneficiary, or one with an addiction problem, could be the biggest threat to your assets. Once a direct gift is made to a beneficiary, there is nothing anyone can do about how the beneficiary spends those funds or handles those assets.
- Estate taxes – all estates are subject to federal gift and estate taxes at the rate of 40 percent. Moreover, the State of Illinois also imposes a state level estate tax that could further diminish the value of your estate after you are gone.
Lincolnshire Asset Protection Trusts
The good news is that with careful estate planning, you can all but eliminate these potential threats to your estate assets. One commonly used estate planning tool that may help is an asset protection trust. The concept is simple. When assets are transferred into an irrevocable trust, those assets become the property of the trust. As such, those assets are no longer vulnerable to creditor claims, divorce, long-term care bills, or a variety of other threats to your assets. Trusts can also be used to protect assets from future beneficiaries by controlling how and when the trust assets are used by the beneficiary and by providing oversight in the form of a Trustee to manage the trust assets.
Contact Estate Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding Lincolnville asset protection trusts, contact the experienced estate planning attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.