Build Asset Protection into Your Estate Plan

A simple estate plan covers the basics: you get to choose who will represent you if you become incapacitated, who will make medical decisions on your behalf, and how your property will be distributed after you are gone. What a simple plan does not cover is how to protect that property before and after your death. That’s why it is so important to build asset protection into your estate plan.

Let’s consider Jeremy, a successful business owner. He did prepare a simple estate plan some years ago. However, he lost a lawsuit shortly before his death. Because he did not consider asset protection, much of his estate went toward satisfying a large civil judgment.

What could Jeremy have done differently?

Reviewed and Updated His Estate Plan

Since Jeremy made his estate plan, his net worth has grown, and his business interests have flourished. Even his family has increased in size. The only thing that hasn’t changed is his estate plan!

Major life events, changes in family structure, and changes in net worth all trigger the need for an estate plan review. Estate planning tools that worked previously may no longer be the best option.

Had Jeremy reviewed his estate plan with an experienced estate planning lawyer, he probably would have learned how to build asset protection into his estate plan.

Considered Taking Advantage of Florida Exemptions

Florida law offers significant asset protection opportunities through the use of exemptions.  For example, qualified retirement plans, life insurance policies, and Florida homestead property are generally exempt from the claims of creditors. In addition, married couples may take advantage of tenancy by the entireties protection.

Consulted with an Attorney about Asset Protection Trusts

An attorney may have suggested establishing one or more trusts. For example, irrevocable trusts typically offer asset protection because the grantor no longer controls the assets used to fund the trust. After establishing an irrevocable trust, Jeremy could have transferred most or all of his assets into the trust.

Considered His Business Options

Jeremy could have explored asset protection strategies like forming a limited liability company or a corporation. He would need to make sure that business assets are owned by the company. Personal assets should be moved to an asset protection vehicle like a trust and kept separate from his business interests.

Have You Included Asset Protection in Your Estate Plan?

One important thing to remember: asset protection must be done before claims are made against you. Transferring funds to a trust during a lawsuit, for example, may be considered a fraudulent transfer.

If you prepared your estate plan years ago, or don’t have a plan, talk to an attorney about asset protection. John Mangan is an experienced Florida estate planning attorney who is board certified in Wills, Trusts & Estates by the Florida Bar. At the Law Offices of John Mangan, P.A., we have assisted many clients in developing comprehensive estate plans that meet their needs. Call us at 772-324-9050 to set up an appointment or use our convenient Contact Form.