Suffering a personal injury not only be traumatizing and painful, dealing with the legal side of the injury can be completely inconvenient and one more thing in an individual's life that they have to deal with. After …
How an Estate Planning Attorney Can Protect Your Assets
On a general level, an estate planning attorney can prepare for the transfer of individual assets following a person’s death. However, an underappreciated and under-discussed topic includes how to protect and preserve these assets. Proper protection and preservation of assets to transfer to one’s heirs after death can minimize the tax obligation, an estate tax.
This tax is incurred at the time of one’s death but can also ensure mechanisms are in place if something unexpected happens. Fortunately, proper consultation with an estate planning attorney can create a framework with arrangements in place to provide protection for the family and additional loved ones.
Asset protection trust
An Asset Protection Trust is an arrangement in which an independent person or financial institution (“the Trustee”) holds the property of a child or grandchild (“the Beneficiary”) for their later benefit. Trustees not only own the Asset Protection Trust but also can distribute funds to the Beneficiary whenever the Trustees deem it necessary, appropriate, or advisable.
An Asset Protection Trust provides legal protections in many different forms because it can separate ownership from control of the trust. The specific protections received from creating an Asset Protection Trust varies depending on the type of trust created. For example, there are both revocable and irrevocable trusts.
With a revocable living trust, a person maintains control over the trust assets and the trust does not provide any protection from creditors. In addition, the estate tax is still imposed on the time of death. However, a revocable trust provides important forms of asset protection because a designated back-up trustee can manage all assets in the event that something happens.
Then, the back-up designated trustee manages the assets so the funds won’t be at risk. Moreover, a revocable trust can also facilitate a timely transfer of the trust assets to new owners after death instead of the assets being in limbo during a lengthy determination process. This speed can be important to protect the valuation of certain assets. In contrast, if an irrevocable trust is created, control and ownership of the assets are completely given up. As a result, creditors may not be able to access those trust assets if filing a claim.
How an estate planning attorney can help
An experienced estate planning attorney not only can discuss the goals of asset protection but also the correct type of trust to realize those goals. Some of the possibilities able to be accomplished with an Asset Protection Trust include:
- Making sure children do not waste their inheritance
- Designating someone as the primary control over assets
- Making trust assets untouchable by creditors
Though it sounds like an excellent idea all around, sometimes an Asset Protection Trust may not even be the right method for financial protection. Because an Asset Protection Trust requires an annual tax return, the Trust might create preparation fees. These sorts of annual costs can create financial disincentives for those people if the Beneficiary is an adult or when the Asset Protection Trust contains less than $100,000.
Call us today
Based on the possible combinations for those attempting to protect their financial assets, consultation with an experienced attorney is important because each option provides a specific and corresponding set of advantages and disadvantages.
Call us at (412) 804-4048 for more information from Kim A. Bodnar, Attorney at Law or to schedule a consultation in our office in Pittsburgh.
NOTE: This is for informational purposes only and does not constitute legal advice.
Check out what others are saying about our services on Yelp: Read our Yelp reviews.
The passing of a loved one is a sad and emotional time. It can be made harder by figuring out how to handle the legal side of distributing a loved one’s property. Sometimes, a will …
Many individuals have not heard of "elder law" attorneys before. While it can be an elusive term, it is imperative that everyone learn more about elder law and why hiring an elder law attorney can …
A Pennsylvania DUI lawyer can assist with an expungement, which is the legal process of deleting or destroying a criminal charge from files, computers and other public records of the crime. Expungement not only seals …
Posted on: February 2, 2019 by Kim Bodnar