You probably already know how important it is to have an estate plan in place. When you think of the need for an estate plan, you also probably think in terms of creating a roadmap for passing your assets down to loved ones after you are gone. In order to pass down assets, however, you must have assets left to pass down. Asset protection, therefore, should be one of the goals of your comprehensive estate plan. Like many people, you may not even realize all of the different ways in which your hard earned assets could be at risk. In order to protect them, however, you need to be aware of the potential risks. You should also consult with an experienced Missouri estate planning attorney so you can learn how to protect assets in Missouri.
The Hidden Threats – How Your Assets Might Be at Risk
When it comes to protecting your assets, you are likely aware of some of the more obvious potential threats to those assets; however, there are hidden threats you may not have considered.
- Divorce – you may have considered the impact your own divorce could have on your assets and planned accordingly; however, have you considered how the divorce of a child (or other beneficiary) could threaten your assets? It works like this: You pass down assets to your son/daughter who is married. Instead of keeping that inheritance separate, he/she co-mingles the assets with marital assets. Later on, your son/daughter goes through a divorce. Because those assets were co-mingles they are now considered marital property and your son or daughter-in-law ends up with them in the divorce.
- Bankruptcy – no one plans to end up in bankruptcy court; however, if you do end up filing for bankruptcy all of your assets could potentially be at risk. The same applies for assets passed down to an adult child or other beneficiary.
- Lawsuits – we live in a litigious society. An unexpected lawsuit could end in a judgment against you that puts your assets at risk.
- Long-term care – if you need long-term care when you are older, you may need to qualify for Medicaid to cover the costs of that care. Qualifying for Medicaid could put your assets at risk if you failed to plan ahead.
- Incapacity – if you were to become incapacitated tomorrow as a result of a tragic accident, who would take control of your assets? Would that person protect them like you would?
- Spendthrift beneficiaries – imagine working hard all your life to be able to leave your loved ones a significant estate when you are gone, only to have a spendthrift beneficiary squander everything you gifted to him/her within months.
How to Protect Assets in Missouri
Now that you have a better idea of the numerous and varied ways in which your assets could be at risk, it is time to consider ways to protect those assets. The most important step you can take is to consult with your Missouri estate planning attorney about including asset protection strategies in your overall estate plan. Because there are so many different ways in which your assets could be at risk, one single strategy won’t be sufficient to protect against all possible threats. Your estate planning attorney can help tailor the strategy to address the threat. One of the most common estate planning strategies used for asset protection is a trust. For example, as part of your Medicaid planning component you might create a Medicaid trust that will protect and manage your assets instead of being required to use those assets to cover long-term care expenses. Assets transferred into an irrevocable living trust are legally removed from your estate, meaning they are out of the reach of creditors of all types. A trust might also be used to protect assets from a spendthrift beneficiary by creating trust terms that dictate what the assets can be used for and how often assets can be distributed. Furthermore, the Trustee of the trust is able to monitor how a beneficiary uses funds distributed from the trust and make adjustments if the beneficiary is squandering the money.
For more formation, please download our FREE estate planning worksheet. If you have additional questions or concerns about asset protection, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.