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estate planning and elder law

What Is Asset Protection Planning?

Have You had the Estate Planning Talk with Your Adult Children?
Asset protection planning is the process of building barriers around your assets, whether those assets are personal or business, to keep them safe from litigation, creditor claims, seizure and burdensome taxes.

Yahoo’s recent article entitled “How to Protect Your Money, Even If You’re Not Rich” says that contrary to what many people believe, asset protection planning isn’t just for the wealthy. Beck, Lenox & Stolzer Estate Planning and Elder Law works with many clients of modest means who are interested in protecting and preserving what they have. The estates of anyone, in any income group, can be sued or suffer from hefty taxation. So, what is asset protection planning?

Asset protection is the process of creating legal documents that may shield certain assets from negative events such as creditor claims, bankruptcy, divorce, significant taxes and the need for long-term care in a skilled nursing facility.

If you want and need to protect your assets, you should be proactive. However, if you have significant debt and few assets and you are subject to a lawsuit, it may be better to file for bankruptcy than to create an asset protection plan. That’s because it’s only worth it if you have significant assets.

There are some events that you cannot be protected against. These include tax liens, mechanics liens, alimony judgments and child support claims.

A plan benefits these people the most:

  • Anyone with a significant amount of assets.
  • Anyone with a significant, recurring amount of credit card debt.
  • Homeowners underwater on their mortgage (your mortgage balance is greater than the value of your home).
  • Anyone whose profession carries with it a high probability of liability, such as doctors and attorneys.

Some assets aren’t subject to creditors, such as retirement accounts under the protection of the Employee Retirement Income Security Act of 1974 (ERISA).

You may also legally preserve at least a portion of your home equity. Homes may be put in another individual’s name.

The goal of an asset protection plan is to set a level of legal separation between you and your assets. This allows you to legally shelter your assets from creditors without doing anything illegal.

Beck, Lenox & Stolzer strongly advises you to consult with an experienced attorney on the topic of asset protection planning. A good attorney can help you decide whether that planning would benefit you in your situation.

Reference: Yahoo! (Nov. 6, 2022) “How to Protect Your Money, Even If You’re Not Rich”


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