What is asset protection? Does an estate plan provide it?
Asset protection is the process in which attorneys put up barriers between you (specifically your assets) and potential creditors. Assets include anything of financial value. For example, checking accounts, saving accounts, brokerages, homes, etc. A creditor is a party that is trying to sue you. Complete asset protection in the law does NOT exist. The purpose of asset protection is to make it so hard to come after you that is would not be worth it. Instead it would be better to settle with you, or not go after you at all. Asset protection is extremely valuable in states with high litigation rates like California or New York.
Yes, an estate plan can provide asset protection but only certain types of estate plans. Simple estate plans that only provide probate protection do NOT have asset protection. You can have asset protection with an irrevocable trust where you give up control of your assets, or a land trust (REIT). Land trusts are revocable trusts that actually hide the ownership of your assets from creditors. The land trust is an incredibly useful estate plan especially when the creator wants to maintain control of their assets. These are the main types of estate plans that offer asset protection. For more information about either of these types of estate plans, please call us for a FREE legal consultation!