- First came the requests to review estate plans, take a fresh look at family and financial issues, discuss long-term care options, reconsider powers of attorney and selections of personal representatives and successor trustees, and update wills and trusts.
- The second wave has been sparked by new interest in a planning option for which many clients had previously assumed they were ineligible: asset protection.
IS ASSET PROTECTION FOR YOU?
As we discuss further on our
asset protection webpage, the benefits of asset protection extend beyond conventional estate planning and are not limited to the very wealthy.
Asset protection strategies can benefit people in a wide variety of categories, such as:
- business owners in high-risk industries
- physicians, attorneys, accountants and other professionals who are vulnerable to professional liability claims
- corporate directors and officers
- any persons and families who have unprotected cash, investments, business ownership or other assets that would be at risk in a lawsuit.
HOW ASSET PROTECTION WORKS
In general, asset protection means taking "non-exempt" assets (i.e., assets that are subject to creditors' claims) and repositioning them as "exempt" assets that creditors cannot touch.
Asset protection also includes positioning non-exempt assets in vehicles that are difficult to "break into" and cause a creditor to re-evaluate whether it is worth the time, expense and trouble of trying to pursue those protected assets.
Most asset protection plans are totally domestic - that is, they do not require an offshore component - but some situations call for an international planning strategy.
ASSET PROTECTION TOOLS
Asset protection tools vary in their applicability and may include:
- domestic asset protection trusts
- LLCs and limited partnerships
- gifting of assets into irrevocable trusts
- transitioning non-exempt assets into exempt assets
- life insurance and annuities
- corporations, including professional corporations.
Each of these tools is generally designed to protect different kinds of assets.
A NOTE OF CAUTION
Even more than other planning strategies, asset protection requires thinking ahead and an in-depth analysis of your assets, potential liability risk factors, and objectives. As a result, the earlier you start the process, the better.
If an unforeseen liability arises, it is probably too late to start planning. Asset protection is of very little help in defending against a pending lawsuit; its greatest value is in protecting your assets against future threats.
A REMINDER ABOUT LLCs
As we mentioned in
our June issue, the Arizona Limited Liability Company Act goes into full effect on September 1. Because LLCs are important components of many asset protection strategies, it is very important that your LLCs' operating agreements properly address the default provisions that the new law imposes.
If we drafted your operating agreement, we can update it for a flat fee of $750. The fee includes a meeting or phone call to review your operating agreement, determine your preferences with respect to the default provisions, and draft a new agreement to be signed by you and your members.
If we did not draft, or you do not have, an operating agreement, we can still assist you, and we can estimate the fee after an initial review.
CONTACT US
If the ongoing events in our society have left you wondering whether your planning adequately addresses the current volatility and protects your hard-earned assets, call Ron or me to schedule a phone call or meeting, or contact us via our online "Make an Appointment" tool.
We can help you analyze your situation, identify potential exposures, and, if needed, recommend strategies to maximize your protection.
