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How to tell if you need asset protection in your estate planning

If you have been active in your estate planning process, then you probably already understand how trusts can provide you with control over the future use of your funds, even after you pass away. You probably also know how important this can be if you are anticipating financial issues with certain inheritors, such as spendthrift family members. What you might not realize is that there is a big difference between basic trust planning, which allows you increased control, and full asset protection.

When you need asset protection

When you are anticipating that your estate will need protection from creditors, either yours or someone else's, then you need the advice of an estate planning attorney who understands how to set up your trusts and other planning documents with this strategy in mind. There are limitations on the use of specific asset protection trusts in many states, including Florida, but there are other ways to protect yourself through existing trust instruments and other methods of estate planning if you work with an attorney who understands your needs.

How to successfully work out an asset protection plan

The American Bar Association web site contains a white paper aimed at the legal community and advising them about asset protection in estate planning. According to that document:

  • You, as the client, should communicate when you intend to engage in asset protection versus when you are working on basic trust and estate issues.
  • Your asset protection should be designed to protect the assets, not defraud or hinder your creditors.
  • You should be "solvent" at the time that the asset protection plan is put into place.

These are important, because there is a big difference between trying to make sure your assets cannot be unfairly seized or garnished and intentionally attempting to avoid outstanding debt obligations, and the success of an asset protection plan is dependent on staying within these bounds.

Finding the right estate planning attorney

Most estate planning attorneys will engage in some amount of asset protection, and the American Bar Association paper tells them that it is important to communicate when this is so. If you are already working with an estate planning lawyer, then notifying him or her about your intention to more actively protect your assets should be all you need to do to get started. If you need an estate planning attorney, now is a good time to get in touch with an experienced one. That way, you can make sure you have put everything in place to keep your estate protected.

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