Asset Protection: Smart Strategies for Estate Planning

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29 Apr

Asset Protection: Smart Strategies for Estate Planning

Careful estate planning that utilizes trusts and other tools ensures your assets are protected and passed according to your wishes.

Key takeaways:

Tools like trusts, insurance policies, and legal entities help protect your assets after you’re gone.
Name beneficiaries on your accounts and consider title implications for your property.
Get personalized guidance from Avior Wealth Management.

Estate planning requires thinking through what will happen to your assets once you’re gone. Without proper planning, your assets may not be protected, and your beneficiaries could have to deal with credits, mismanagement, or even lawsuits regarding your estate.

Prioritize preserving your assets for future generations with nuanced estate planning strategies. This guide gives you practical tips and examples of how to integrate the right tactics into a secure, successful estate plan.

Asset protection tools for estate planning

You have various tools at your disposal, all with advantages and disadvantages, to help you protect your assets when estate planning. You may consider a trust to protect the assets that you want beneficiaries to receive in the future or you may consider insurance policies and business protection tactics, like LLC creation. 

Let’s explore some of these tools and how they may fit into your strategy:

1. Trusts

Trusts are wise estate planning options since they protect assets from the normal asset transfer process after death – primarily the probate process, but also creditors and lawsuits. There are several types of trusts out there you may be considering. Here are a few common trusts for estate planning:

  • Revocable living trust: This type allows you to manage and distribute assets during your lifetime and ensures seamless transition at death without going through probate. You may use this tool to have the flexibility to continue managing your assets and distributing them to heirs.
  • Irrevocable trust: Irrevocable trusts provide a more secure format to protect assets since you get more protection from creditors and reduce state taxes. You can essentially shield assets from legal claims later. However, you can’t alter these trusts once they’re established.
  • Charitable remainder trust: If donating money is a priority for you, a charitable trust allows you to securely pass assets to a cause you care about. You receive income during retirement and the remainder assets benefit your chosen charity. 

2. Insurance policies

Leveraging insurance options can also help with asset protection. Consider these common policy types:

  • Life Insurance: Investing in life insurance can provide financial security to your beneficiaries, cover estate taxes, and facilitate the transfer of wealth. This way, you ensure heirs receive their intended inheritance.
  • Irrevocable life insurance trust (ILIT): An ILIT removes life insurance proceeds from the taxable estate, providing liquidity for estate settlement. Death benefits can avoid estate taxes.

3. Legal entities

You can establish certain legal entities to ensure your assets are passed to family members according to your wishes:

  • Limited liability company (LLC): LLCs offer liability protection, flexibility, and the potential for centralized management of family assets. They can be wise to hold real estate and business interests, shielding personal assets from business liabilities.
  • Family limited partnership (FLP): FLPs can centralize the management of assets, providing valuation discounts for gift and estate tax purposes. You can consolidate family investments and allow for efficient transfer of wealth to the next generation with potential tax advantages.

It is always crucial to consult with legal and financial professionals when implementing these tools in estate planning. Their effectiveness can vary based on individual circumstances and changing legal requirements.

Other strategies for asset protection

You may want to take a few additional steps to secure your assets as part of your estate planning process. First, understand that how your property is titled will impact how everything will be distributed to heirs. Go through your accounts, like your retirement savings accounts, and name beneficiaries to those assets. Then, they will be automatically distributed to whoever you designated. 

Additional considerations surround real estate. You may own your home jointly with your spouse, so if you’re both on the home’s title, it would be distributed to your surviving spouse. The same goes for vehicles and other property. However, keep in mind that if these assets are only titled in your name, they’ll be part of your estate after your death and will enter probate.

Something called joint tenancy with right of survivorship gives each owner survivorship rights if the other owner dies, inheriting the value of the deceased owner’s property shares. Spouses can own property jointly with tenancy by the entirety, which only married couples can use, wherein each party has the right to an equal part of the property as long as they were married when the title was put in their two names. This also gives them the right of survivorship.

Your will should clearly state requirements for all of your assets and property to avoid confusion. You can also use trusts to avoid all the headaches and time your heirs spend on probate.

Remember to regularly review and update your estate plan and asset protection strategies. Changes to applicable laws or your personal circumstances can affect how you want to protect and distribute your wealth.

Personalized estate planning with asset protection at Avior

Increase asset protection in your estate plan by establishing trusts, leveraging insurance benefits, and creating legal entities. These methods help protect your assets from issues caused after your death from probate, creditors, and lawsuits.

The team at Avior is here to help guide you through these important financial decisions. We tailor our approach so your goals are met and your investments continue to grow.

Get in touch with Avior to proceed with estate planning strategies for asset protection.

Disclaimer: Nothing contained herein should be construed as legal or tax advice. Avior and our Advisors will work with your attorney and/or tax professional to assist with your legal and tax strategies. Please consult your attorney or tax professional with specific legal and/or tax questions. Investment Management and Financial Planner are offered through Avior Wealth Management, LLC, an SEC-registered investment advisor. Past performance is not a guarantee of future results. Investments are subject to loss, including the loss of principal.

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