No matter how much or what you own, it is important to protect from lawsuits any assets or estates, especially if you plan to leave them to heirs. Not only do you need to know what to protect, you need to know how to protect it. Asset protection planning is not quite the same thing as estate planning, but each process involves organizing your affairs and assets in advance to protect your assets from the risks to which they may be subject. However, asset protection planning is usually geared toward protecting a business or professional practice, though these are not the only applications of asset protection.
It is also important to understand what an asset protection plan does not protect. This service does not help clients in tax evasion. It also does not hide assets. Rather, it secures them as protected assets. A reputable asset protection attorney will not use this method as a way to defraud creditors. People actually tend to use asset protection as a safeguard against the potential of a future legal liability, not only as a way to protect assets in the event of death.
A good plan will not only deter any possible litigation or harassment by creditors, but it should also work to create a satisfactory outcome in the case of a settlement. This comes about by following a process of creating a user-friendly plan, discouraging legal action, providing the incentive of an early and cheap settlement, leveling the litigation playing field, enhancing your bargaining position, providing options and, of course, winning. Asset planning not only protects you from creditors, but it also helps you reallocate your most valuable assets to decrease federal inheritance tax, eliminate the probate process and save on estate tax returns and death tax.
In other words, asset protection may be a part of estate planning, but it goes beyond this area of law. Estate planning is meant specifically to help you transfer your assets from one generation to the next. Estate planning encompasses not only asset plans, but also long-term care, Medicaid and tax planning. It is usually best to find a comprehensive estate plan in order to prevent any miscommunication among entities such as the CPA, estate planner and financial or retirement planner because they may not all belong to the same firm.
Having a good asset protection plan just may help prevent your loved ones from years of litigation or other legal actions should the inevitable occur. An asset plan will keep you from dying ‘in testate’, meaning that you do not have a will, trust or other instructions on what your loved ones should do with your assets. However, a good plan should also help you ensure that you have an estate to leave to your heirs in the first place. It is important that this plan is not fraudulent or intended to be deceptive in any way; still, it should be highly favorable to you so that you keep your assets in the case of litigation.
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