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asset protection

Asset Protection Planning

Asset Protection Planning

Which United States jurisdictions allow for the creation of asset protection trusts?

Domestic asset protection trusts are permitted under the laws of Alaska, Delaware, Hawaii, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia and Wyoming.

What other areas of law should an estate planning attorney be familiar with before practicing asset protection planning?

In addition to a working knowledge of taxation and business entities, an estate planning attorney wishing to engage in asset protection planning should be familiar with general concepts of bankruptcy law and creditor/debtor law. Specifically, knowledge of how applicable fraudulent transfer/conveyance laws apply to proposed planning (either under the UFTA or UFCA) is absolutely essential.

Who should consider establishing an asset protection trust?

Asset protection trusts are typically established by individuals in high risk occupations (i.e., doctors and real estate developers) and very wealthy individuals that realize they are targets for creditors due to their net worth. Asset protection trusts can also be used in lieu of a prenuptial agreement.

Are there any tax reasons to establish an asset protection trust?

In certain situations an asset protection trust can be used to eliminate or reduce the imposition of state income taxes. An asset protection trust may also be used to remove assets from a grantor’s estate while still allowing the grantor to potentially benefit from the trust assets.

Read more related articles here:

Make Your Estate Creditor-Proof

How to Protect Your Assets From a Lawsuit or Creditors

The 2021 Florida Statutes

Also, read one of our previous Blogs at:

How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

financial advisor

7 Mistakes People Make When Choosing a Financial Advisor

7 Mistakes People Make When Choosing a Financial Advisor

Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come.

A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.1

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.2

Consider this example: A recent Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.3


Hiring an Advisor Who Is Not a Fiduciary

By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. Fiduciary financial advisors must avoid conflicts of interest and disclose any potential conflicts of interest to clients..


Hiring the First Advisor You Meet

While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.

Choosing an Advisor with the Wrong Specialty

Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses – before signing the dotted line.

Picking an Advisor with an Incompatible Strategy

Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style.


Not Asking about Credentials

To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP.

Not Understanding How They are Paid

Some advisors are “fee only” and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them.

Not Hiring a Vetted Advisor

Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one. Do your research. Reach out to other professionals for referrals.

Read more related articles at:

Don’t make these 6 mistakes when choosing a financial adviser


Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

Also, read one of our previous Blogs here:

A Financial Advisor’s Role in Estate Planning

Estate vs Succession planning

Succession Planning vs. Estate Planning – Why They Are Both Important

Succession Planning vs. Estate Planning – Why They Are Both Important

Vancouver Business Journal

One of the biggest misconceptions is that estate planning and succession planning are one in the same
Succession plans are critical to the sustainability of a business. Even the most successful closely held business owners find succession planning more difficult than other critical business decisions. One of the biggest misconceptions is that estate planning and succession planning are one in the same.Succession planning directly relates to the actual business itself. It is the strategy that will enable it to continue to operate smoothly and effectively as it is passed onto future generations, partners, or successor owners. Estate planning relates to all the assets in an individual’s estate including any ownership interests in closely held businesses.

For succession planning, important questions to consider when developing your succession plan include:

  • Is the business viable into the next generation? If so, do family members not currently in the business intend to join the business and what is their vision? How do their individual visions align with the current vision of the business and other family members interested in the business as well?
  • Should the business be sold to provide liquidity for future financial security?
  • Who will take over running the business if not sold and are they properly qualified and appropriately trained to do so? If not, can they be and how so?

For business success, it is important to promote training and leadership preparation inside the organization and to keep in mind the future needs of the business.

Business succession planning should solidify the continuity structure for your business, whatever your wishes may be, while estate planning allows the opportunity to carry out your wishes for all of your assets (business and otherwise) during your lifetime, during a period of incapacity, and after your death.

Important questions a business owner should consider when developing an estate plan include:

  • What are the individual’s sources of wealth (all types of assets) and their potential estate tax exposure?
  • How does the individual define financial security and how much of their current wealth is below or in excess of that amount?
  • Are any insurance and investment portfolios owned? Can they be used as liquidity to pay estate tax liabilities?
  • What is the plan for final health care directives, funeral costs, and a distribution of the assets?

Estate planning also has the capability of reducing exposure to estate and other taxes, arranging for professional investment management for yourself or future generations, and bypassing probate.

Not surprisingly, conversations about ownership, wealth, and responsibility of the family and key business personnel could be awkward and can lead to disagreements within the family and/or owners. Without consideration of a complete plan that includes both a succession plan for the business and an estate plan, serious financial and emotional consequences can affect your family business.

For example, if the issue of estate equalization among all family members is a priority of the business owner, the succession plan and the estate plan must be coordinated. If the estate plan leaves the business to those children who are involved in the business, then the plan must provide how the uninvolved children will receive their “share” of the estate. If the estate is subject to estate taxes and a plan has not been made to provide liquidity for payment of taxes, the results could leave the uninvolved children with no assets while the involved children receive the business; or the business may have to be sold to pay the taxes and the business owner’s succession plan is thwarted.

Lack of a succession plan can result in (i) unclear direction for the business without a known leader; (ii) loss of employee faith in company leadership; (iii) power struggles among middle management; (iv) family units broken apart over disagreements; and (v) a potential loss in value due to a key person discount when surviving shareholders go to sell the business.

Lack of estate planning often results in (i) unforeseen estate tax liability; (ii) probate court costs; (iii) delay in distribution of assets and resolution of the estate; and (iv) potential litigation costs associated with the disagreements among living family members.

If you own a business, both types of planning are essential to help to streamline the transfer of your assets, to maximize family harmony, and ultimately to protect the legacy you’ve worked hard to create. The old adage “don’t put off until tomorrow what you can do today” perfectly applies to business succession and estate planning.

This article summarizes aspects of the law.  It does not constitute legal advice nor does it create an attorney client relationship.  For legal advice for your situation, you should contact an attorney.

Read more related articles here:

Estate Planning vs. Succession Planning – What’s the Difference and Why Are They Important?

Legal Corner: What’s the difference between a succession and an estate plan?

Also, read one of our previous Blogs here:

Business Succession Planning: 5 Ways to Transfer Ownership Of Your Business

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

johnny Depp

Don’t Be Like Johnny Depp, Get a Prenup

Don’t Be Like Johnny Depp, Get a Prenup

Not having a prenuptial agreement can be a costly mistake — not just for Johnny Depp, but for you as well.

Depp, 52, and his wife of just 15 months, Amber Heard, 30, are heading for splitsville. Heard filed a divorce petition earlier this week, citing irreconcilable differences, and requested spousal support. Depp’s response, according to The Associated Press, asked the judge to deny Heard’s support request — and asked that Heard pay her own attorney’s fees.

The couple reportedly did not have a prenuptial agreement, which could leave Captain Jack Sparrow’s treasure rife for plundering.
“Depp would be a poster boy for a prenup,” said Arlene Dubin, chair of the matrimonial and family law practice at Moses & Singer in New York. “If you were checking off the boxes [of who should consider one], he pretty much has them all.”

Generally speaking, she said, prenups are an important consideration for:

  • older couples;
  • those who come into the marriage with assets (as he did with a reported $400 million);
  • people who have children from prior relationships (as he does);
  • people who expect future celebrity and significant income (as he could, despite dismal reviews of “Alice Through the Looking Glass”).

Without one, the process of getting unhitched can lead to protracted and expensive legal battles, or result in a less-fair division of assets.

A multimillion-dollar net worth isn’t required to benefit. Hammering out a prenuptial agreement — or for unmarried couples, a cohabitation agreement — can make sense for many regular folks, too, said Joslin Davis, president of the American Academy of Matrimonial Lawyers. “It requires people to think ahead,” she said.
Take the case of older couples and those who are remarrying. A prenup can protect your assets not just in divorce, but in death, said Davis, who is also a principal of Allman Spry Davis Leggett & Crumpler, P.A., in Winston-Salem, North Carolina.

Many jurisdictions prevent spouses from being disinherited, she said, so a court could easily void provisions in a will that leaves everything to your kids from a prior marriage. But a prenup could be worded to require your new spouse to waive their right to dissent or take an elective share in your estate.

For young couples, a prenup offers the chance to hash out divorce handling of issues like joint efforts to pay off one partner’s student-loan debt, or how a partner might be compensated for leaving the workforce to care for their children.

“This way, the two people can write their own deal at the beginning of the relationship, at a time when they are in love and looking out for each other,” said Dubin, who is also the author of “Prenups for Lovers: A Romantic Guide to Prenuptial Agreements.”

Already married? Postnups are generally harder to come by. “Sometimes, one party may be advised that they are better off without one,” said Davis. “The law already favors them.”

Read more related articles at:

A Tale of Two Celebrity Marriages and One Prenuptial Agreement

We Don’t Need No Stinkin’ Prenup: Lessons for Johnny Depp

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.


What if your inheritance turns out to be just a pile of bills?

What if your inheritance turns out to be just a pile of bills?

What if your inheritance turns out to be just a pile of bills? Debt collectors are on your tail. Blogger John Schmoll’s father left a financial mess when he died: a house that was worth far less than the mortgage, credit card bills in excess of $20,000—and debt collectors who insisted the son was legally obligated to pay what his father owed.

Fortunately, Schmoll knew better.

“I’ve been working in financial services for two decades,” says Schmoll, an Omaha, Nebraska, resident who was a stockbroker before starting his site, Frugal Rules. “I knew that I wasn’t responsible.”

Baby boomers are expected to transfer trillions to their heirs in coming years. But many people will inherit little more than a pile of bills.

Nearly half of seniors die owning less than $10,000 in financial assets, according to a 2012 study for the National Bureau of Economic Research. Meanwhile, debt among older Americans is soaring. It used to be relatively unusual to have a mortgage or credit card debt in retirement. Now, 23% of those older than 75 have mortgages, a fourfold increase since 1989, and 26% have credit card debt, a 159% increase, according to the Federal Reserve’s latest data from the 2016 Survey of Consumer Finances.

If your parents are among those likely to die in debt, here’s what you need to know.

You (probably) aren’t responsible for their debts. When people die, their debts don’t disappear. Those debts are now owed by their estates. Some estates don’t have enough assets (property, investments and cash) to pay all of the bills, so some of those bills just don’t get paid. Spouses may have the responsibility for certain debts, depending on state law, but survivors who aren’t spouses usually don’t have to pay what’s owed unless they cosigned for the debt or applied for credit together with the person who died.

What’s more, assets that pass directly to heirs often don’t have to be used to pay the estate’s debts. These assets can include “pay on death” bank accounts, life insurance policies, retirement plans and other accounts that name beneficiaries, as long as the beneficiary isn’t the estate.

You need a lawyer. Some parents hope to avoid creditors or the costs of probate, which is the court process that typically follows a death, by adding a child’s name to a house deed or transferring the property entirely. Either of those moves can cause legal and tax consequences and should be discussed with a lawyer first. After a parent dies, the executor must follow state law in determining how limited funds are distributed and can be held personally responsible for mistakes. That makes consulting a lawyer a smart idea — and the estate typically would pay the costs. (The costs of administering an estate are considered high-priority debts that are paid before other bills, such as credit cards.)

At his attorney’s advice, Schmoll sent letters to his dad’s creditors explaining the estate was insolvent, then formally closed the estate according to the probate laws of Montana, where his dad had lived.

A lawyer also can advise you how to proceed if a parent isn’t just insolvent, but also doesn’t have any assets at all. In that situation, there may not be a reason to open up a probate case and deal with collectors, Sawday says.

“Sometimes, I advise clients just to lay the person to rest and do nothing,” Sawday says. “Let a creditor handle it.”

You need to take meticulous notes. The financial lives of people in debt are often chaotic — and sorting it all out can take time. As executor of his dad’s estate, Schmoll dealt with over a dozen collection agencies, utilities and lenders, often talking to multiple people about a single account. He kept a document where he tracked details such as the names of people he talked to, dates and times of the conversations, what was said and required follow-up actions as well as reference numbers for various accounts.

You shouldn’t believe what debt collectors tell you. Some collectors told Schmoll he had a moral obligation to pay his father’s debts, since the borrowed money might have been spent on the family. Schmoll knew they were trying to exploit his desire to do the right thing, and advises others in similar situations not to let debt collectors play on their emotions.

Read more related articles here:

Can you inherit your dead parent’s debts?

Can You Inherit Debt?

Also, read one of our previous blogs at:

Will I Get A Bill as My Inheritance?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.


Prenuptial Agreement

Prenuptial Agreements: What Is A Prenup And Should I Get One?

Prenuptial Agreements: What Is A Prenup And Should I Get One?


When two people get married, they’re not just uniting their bodies, hearts and souls; they’re also joining their financial assets. It’s a terribly unromantic fact — and probably the last thing anyone wants to talk about at length when they first get engaged.

Questions like “Should we get a prenuptial agreement?” can be downright buzzkills.

But if you’re planning to get engaged or already are, this is an important topic to unpack together.

We’ve set out to answer a number of questions you might have about prenups by consulting divorce lawyers and financial experts, along with a relationship therapist.

What is a prenup, exactly?

“It is a legal agreement entered into between two people before they are married that that can cover a wide variety of issues centered on property rights and assets,” says Ike Z. Devji, of-counsel asset protection attorney in Phoenix, Arizona. “In addition to the traditional role that most people think of (dictating the division and distribution of a variety of physical assets and setting terms for any required spousal maintenance at divorce), pre-nups can also cover death, incapacity, estate planning, student debt, spousal support and a variety of other legal issues including the division and attribution of income earned during marriage.”

What is the purpose of a prenuptial agreement?

There are many, but “one of the main reasons to sign a prenup is to deviate from what the law would provide in the event of a divorce,” says Elysa Greenblatt, a divorce lawyer in NYC. “People often want to protect their assets from distribution and a prenup is the obvious answer. There are other reasons that might not come to mind as quickly [such as] if one party has a child from a prior marriage — it can be important to have a prenup so that the parent can support that child with marital income. Another reason has to do with the fact that divorce laws vary state by state. If you live somewhere that has laws of equitable distribution but you may move to a community property state, it is important to protect your assets and set how they will be distributed.”

Often people want a prenup so they can keep what they brought into the marriage, which the law typically already protects — it’s when financial assets get commingled that things get complicated, and that, happens easier than you think.

Buying a house together with just one person’s money is commingling. Starting a business together using one person’s capital is commingling. Moving money around more than a few times can even qualify as commingling,” says Knight. “The longer you’ve been married, the more you are likely to commingle your assets [and have] non-marital assets turn into marital and, thus, divisible assets.

Aren’t prenups just for rich people?


“Typically, you think of a prenuptial agreement as being for those individuals with substantial means to protect,” says Marcia Mavrides, a divorce attorney in Massachusetts. “This isn’t always the case anymore, and in fact, many millennial clients hire Mavrides Law (my firm) to assist them with a prenup to protect them from their future spouse’s student debt and visa versa. Even though these individuals may have significant earning potential, they realize that they should each be responsible for their own student loans. The best part is that these couples have discussed their financial situations in great detail before hiring attorneys to draft a prenup, so there are no unpleasant surprises.”

How much does a prenup cost?

There’s no fixed cost here, as it depends on both geography and how much negotiating takes place.

If you’re in a situation where your betrothed has the bulk of the assets (that would be protected under the prenup), then they should cover the costs of your counsel, which Frawley notes is common practice.

To get a better idea, you should absolutely meet with a lawyer for a consultation.


How long does a prenup take?

Again, it depends. Typically, the more assets you or your partner bring to the table (and the more ardent your lawyers), the longer this will take.

“Ideally, you should start the prenup conversation with your spouse shortly after getting engaged,” says Mavrides. “You and your fiancé should each find an attorney and begin the drafting process at least six months prior to your wedding.”

You may even start exploring prenups before you get engaged.

“I had a case this year where we did a prenup before they got engaged,” says Pollock. “The earner had a strong feeling about conditions under which he was willing to be married. He had to be sure [his prospective fiancee] agreed what marriage looked like before he was willing to do it.”

The couple did end up getting engaged.

Do both parties need a lawyer for a prenuptial agreement?

While you might be able to find a lawyer who will draft up a prenup for both of you, this is highly inadvisable. So, to be safe, the answer is yes.

“One of the hallmarks as to whether a prenup is ‘fair and reasonable’ at the time of execution is whether a party had an attorney at the time the document was being negotiated,” says Shemin. “Personally, if I am the mediator, or even if I just represent one party, I insist that the other party have counsel. This is the general practice. Parties can work with one mediator, or, one lawyer to do the drafting — but each party should/must (if not legally, then advisedly) have his/her own counsel. Since prenups are governed by state law, although this may vary state-to-state, it is generally considered the advisable and preferred practice.”

Can prenups be thrown out?

As legal contracts, one would think that prenups would be set in stone, but in exceptional cases, they can be broken in divorce.

“Prenups are not ironclad and can be overturned on a number of circumstances,” says Megan Gorman, managing partner at Chequers Financial Management. “If one party had a significant windfall, it would be prudent to speak with the attorneys who handled the prenup to understand your rights. There might need to be changes made to the prenup. Keep in mind things evolve and that the best course of action is to always be open with your spouse on finances.”

Can I get a prenup online?

Technically yes, but you’re likely wasting your time and money.

“Obtaining a prenup online is not advisable,” says Gorman. “There are complex legal issues at play. You need to understand your rights. An online approach is risky and will likely have holes in the event of a divorce.”

A ‘postnup’ is also an option

If entering into a prenup is not something you can afford in terms of time or money before your wedding, you can absolutely arrange a postnuptial agreement after you’re married.

“The cost is the same and the process is the same [as a prenup],” says Pollock. “Commonly with a postnup though there’s a specific purpose, or a live event that triggers re-examination, such as the purchase of real estate, where you want to specify how that would be distributed — or someone is thinking about leaving the workforce and wants to negotiate how assets should be distributed.”

This is perhaps another article in itself, but Dr. Fran Walfish, a relationship therapist in Beverly Hills, shares three quick tips on navigating this potentially touchy conversation:

1. Admit that this is a tough but necessary talk

“Tell your beloved intended that this is a hard conversation to have and that you want to make it as productive as possible. All of us struggle to hear difficult things. When you share and expose your vulnerability the other person feels safe to do the same with you.”

2. Discuss in a peaceful environment

“Be sure you are in a quiet place with no distractions so you can focus on the other person.”

3. Listen patiently and mindfully

“Be ready to accept anything the other person says. You don’t have to agree but listen openly without becoming defensive. If you are shy and don’t know what to say, offer compassionate reflection of what you hear the other person saying. This allows the other to feel heard, validated and accepted.”

Read more related articles here:

Financial Planning For Young Adults: Prenuptial Agreements—What You Should Know Before You Get Married

Considering a Prenup? Here’s Everything You Need to Know

Also, read one of our previous Blogs at:


Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

Steve McNair

Family of Steve McNair dividing up estate despite lack of signed will.

Family of Steve McNair dividing up estate despite lack of signed will.

Steve McNair, a former NFL quarterback with the Houston Oilers, Tennessee Titans, and Baltimore Ravens, was shot to death in Nashville on July 4, 2009.

Even though he left no will, Steve McNair’s entire immediate family has been provided for under instructions the slain former NFL quarterback left before his death, his agent said. McNair’s wife, Mechelle, is not trying to exclude McNair’s mother and two children he had with other women, his agent, James “Bus” Cook, told The Associated Press.

“He has taken very good care of all of the children, his wife and his mother,” Cook said in a phone interview from Hattiesburg, Miss. “Every player — every person — I know would do well to provide for their family like he has. So everybody’s going to be fine, everything’s going to be good, and there’s no disagreements between anybody.”

McNair had two children — Steven L. McNair Jr. and Steven O’Brian Koran McNair — before marrying Mechelle McNair. The couple also had two children — Tyler James McNair and Trenton Jon McNair.

Cook said reporters looking at Mechelle McNair’s emergency petition may have been confused by the routine filing, but that she followed a judge’s direction and Tennessee law when filling out the paperwork. McNair listed herself and her children as direct heirs, then listed the quarterback’s other children elsewhere in the filing since the court had no immediate proof the children were legally Steve McNair’s.
That proof — a well-documented legal history in Mississippi — has been supplied, Cook said. Steve McNair has been legally responsible for the children since he left college at Alcorn State and has far exceeded the court’s instructions for support, Cook said.
“Mechelle’s the only one that can contest it and she’s not contesting it,” Cook said.

“Your prayers, kind deeds and outpouring of support throughout this difficult time have been of tremendous comfort to us,” she said in the statement. “May you be richly blessed for all that you have done and continued to do. You are appreciated beyond measure.”

Steve McNair had wills drafted two or three times before his death, but never signed them. But any will prior to the marriage would have been null and void under Tennessee law anyway, Cook said.
McNair left a large estate behind that’s in probate in both Tennessee and Mississippi. He made at least $90 million in salary over his 13-year career with the Houston Oilers, Tennessee Titans and Baltimore Ravens, plus any marketing deals he had. He had both business dealings and real estate holdings that must be divided.

Read more related articles at:

Steve McNair’s sons get trust money

Also, read one of our previous Blogs here:

What Does it Mean to Die Intestate?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

funding a trust

Once You Create a Living Trust, Don’t Forget to Fund It

Once You Create a Living Trust, Don’t Forget to Fund It

Your real estate holdings, life insurance, bank accounts and retirement savings won’t magically flow into your trust. You have to put them there. Failure to do so could mean months of probate court hassles for your heirs.

In my experience, all three are possibilities that can contribute to a costly, yet preventable, error.

Creating a trust is only the first step in the process; it also must be funded. To fund a living trust is to transfer property to the trust – either by giving the trust ownership or, in some cases, by designating the trust as a beneficiary.

So, what can be done if you have a trust and aren’t sure if it has been funded? Here are some steps to take:

1. Check all the deeds on your real estate holdings.

If you have a primary residence, vacation home, timeshare and/or rental property, you’ll want to confirm that these assets are in the name of your trust. In many cases, the estate planning firm that drafted your trust will take care of the transfer for you. Still, it’s important to be sure everything is in order.

If, for example, you refinanced your home at some point, your lender may have required you to remove the name of the trust for financing purposes. And all too often when this happens, the homeowner forgets to change the deed back into the name of the trust. In some cases, the estate planning firm might not have handled the recording of the deed, or maybe there was an error in processing. All your deeds should be checked to confirm they are in the name of your trust.

2. Review your financial statements.

Gather any bank and investment/brokerage statements that are not part of an IRA or retirement plan and confirm that each of these accounts has your trust listed as the owner. Generally, you can confirm this by either calling the institution or reviewing the titling on your statements. If you look at your statement and notice there isn’t any reference to the trust, it’s likely that it hasn’t been accurately recorded.

3. Examine your annuity and life insurance policies.

Verify the parties to these contracts: the insured/annuitant, owner, and primary and contingent beneficiaries. In these types of policies, you’ll be able to name a primary and contingent beneficiary directly with the company. In most cases, I encourage clients to list the trust as primary or contingent beneficiary on their life insurance policies. (Sometimes, it makes sense to list a spouse as the primary beneficiary and the trust as the contingent beneficiary to more efficiently distribute the funds to a surviving spouse.) The rules surrounding annuity beneficiaries were changed a few years ago, so in this particular area, I advise consulting a financial or tax professional who has experience in this environment. Don’t assume that naming the trust as primary beneficiary will achieve your estate planning and tax planning goals.

4. Address IRAs and other retirement plans separately.

IRAs and retirement plans must be treated on a stand-alone basis when determining whether a trust should be listed as a primary or contingent beneficiary. Listing a trust as a beneficiary in many cases accelerates the income tax due on the inherited IRA or retirement plan. Having the trust listed as beneficiary can also limit the flexibility in how distributions are made to the trust beneficiaries versus naming those same individuals directly as beneficiaries. The primary reason for listing a trust as a beneficiary to an IRA or retirement plan is to protect that asset from creditors, a spendthrift, or perhaps due to a special needs beneficiary. This is where working with an experienced specialist could save you from making an expensive mistake.

Confirming that your assets are in your trust takes very little time and no money. Don’t assume that your estate planning attorney has taken care of this issue. In most cases, the firm that handled creating your trust document will only change ownership on real estate located in the state in which its attorneys are licensed to practice law. A firm often will produce letters of instruction as part of their services, but that doesn’t mean it will actually handle the funding of your trust.

If you have a trust and haven’t conducted a funding audit, you may be putting your family in jeopardy of heading to probate court. Delays could occur at your death or incapacity if the assets aren’t in the trust. Remember, assets don’t just move automatically into a trust — they have to be put there.

Luckily, if you have had your Estate Planning including most Trusts created with us here at Legacy Planning Law Group, you have not only been given instructions but offered assistance is physically funding your Trust. We call it Asset Alignment and we have a dedicated Asset Alignment Coordinator who specifically creates a funding/asset alignment report for you which includes instructions, but also will be on standby to answer any questions you may have, assist you in getting accounts into your trust, provide you with letters, recommend which assets to put in to your trust and which you can elect to leave out, and which you should just leave out. If you hit a snag, our Asset Alignment Coordinator is here for you, to walk you through the process. Often the process is simple as our Asset Alignment Coordinator is expert in this field and has done most of the leg work for you. We also deal very closely with your financial advisors if you have one to help get all your portfolio aligned and funded into your trust. We have streamlined this process to make it as simple as possible, but you still must do a little work on your end to get your trust funded, your assets aligned in your trust. Remember, an unfunded trust is a worthless trust! We are here to guide you every step of the way to make the process go as quickly and seamlessly as possible!

Read more related articles at:

What Is Funding a Trust?

Top 8 trust funding mistakes

Also, read one of our previous Blogs at:

An Unfunded Trust is a Useless Trust.

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

protect assets from creditors

Make Your Estate Creditor-Proof

Make Your Estate Creditor-Proof

Here’s how to ensure assets go to your heirs

Ensure your assets go to directly to your loved ones instead of through probate.

When you pass away, the tax man isn’t the only one who can take a bite out of the assets that you leave behind for your loved ones.

Whether it is cash, real estate, retirement money or other funds, inherited assets can suddenly come up for grabs in a number of scenarios when creditors and others come calling.

Experts say you can often make your estate creditor-proof by avoiding probate, which is designed to pay off creditors. Here’s a primer on four ways to avoid probate and prevent outsiders from snatching the money you’ve left for your heirs. These measures protect your relatives if they ever get sued, file for bankruptcy or go through a nasty divorce after you’ve died.


1. Create a trust

Establishing a trust is not only a key way to skip probate court, it can also prevent the assets you’ve spent a lifetime accumulating from going to predators who might slap your heirs with lawsuits.

Scenario: A 77-year-old man died of cancer. He had a will that left $250,000 to his 26-year-old granddaughter, whom he intended to help buy her first home. Two years after her grandfather’s death, the granddaughter got into a minor car accident. The other driver wasn’t hurt but sued anyway, eventually winning a big chunk of the young woman’s $250,000 inheritance.

How to prevent this: Establish a trust instead of passing money via a will, recommends Elise Gross, an attorney with the Presser Law Firm P.A., a Boca Raton, Fla.-based company that operates nationwide.

“The trust can specify that the money only be used for certain purposes, like the education, care or support of a specific beneficiary. This way, there can be no payout to creditors,” Gross says.

In some states, such as Florida, living trusts are commonly used. These trusts are called “revocable” because you control them and can change them at any time while you are alive. Once you die, however, your living trust becomes irrevocable (since you aren’t alive to revoke it), and the trust is a separate legal entity.

In New York and New Jersey, people typically create testamentary trusts, Gross says. This type of trust is created by the terms of a will, and the trust only takes effect upon a person’s death.

Both types of trusts can contain specific language and provisions that prevent your beneficiaries’ creditors from seizing any trust assets.

Unlike wills, “trusts are not a matter of public record. They’re a tool for maintaining privacy,” says Reid Abedeen, a partner at Safeguard Investment Advisory Group LLC. “In addition, trusts are much more difficult to contest than a will.”

A final advantage of a trust over a will is that a will has to go through probate, which is expensive and time-consuming. Probate costs can eat up more than 3 percent of an estate. So if you bequeath $1 million through your will, your heirs could pay more than $30,000 in probate expenses and wait a year or more for their inheritances.

2. Handle retirement assets appropriately

Be careful with how you pass along retirement assets such as IRAs and 401(k) plans. Creditors can sometimes go after those monies if one of your loved ones winds up in bankruptcy court.

Scenario: A 62-year-old mom died of diabetes and left her $100,000 IRA to her only daughter. Five years after receiving the inheritance, the daughter ran up a lot of credit card debt and filed for bankruptcy. She claimed the inherited IRA was exempt from her creditors, but the bankruptcy court disagreed and that money was used to pay off the debt.

How to prevent this: Leave IRAs to beneficiaries in a separate IRA trust to keep the funds away from creditors.

“The Supreme Court ruled in 2014 that any time a child or grandchild inherits an IRA, it’s no longer protected from creditors,” says Pat Simasko, head of Simasko Law and Simasko Financial in Mount Clemens, Mich.

By creating a stand-alone IRA trust for children or grandchildren to inherit an IRA, your offspring “will have access to the money, but creditors won’t,” he says.

Fortunately, married couples don’t have to worry about this problem. Under current law, if Mom dies with an IRA, Dad is allowed to receive her IRA assets as a “spousal rollover” and the funds are protected from outsiders.

3. Safeguard life insurance proceeds

Money held in a life insurance policy is protected from creditors, so any death benefit or cash value is protected and will go directly only to the individuals or organizations you name as beneficiaries.

But once life insurance proceeds are distributed as cash to your beneficiaries, the funds are open to attack from anyone, including your child’s conniving ex-spouse.

Scenario: A couple in their mid-80s has spent a lifetime together working hard and saving money. They have $1.5 million in life insurance and have told their three sons that each of them will receive $500,000 in insurance payouts. The youngest of the three sons is going through a bitter divorce with his estranged wife. The soon-to-be ex-wife has already told her lawyer about her spouse’s anticipated inheritance, and she feels entitled to a piece of it.

How to prevent this: To thwart a bitter ex from trying to lay claim to your kid’s inheritance, safeguard the life insurance by putting it an irrevocable life insurance trust (ILIT).

An ILIT is a tool specifically designed to own life insurance. Just like other trusts, the ILIT has a trustee, beneficiaries and precise terms for distributions.

“You can add protective provisions, like a spendthrift clause and a discretionary distribution clause, to keep the insurance proceeds from your beneficiaries’ creditors,” Gross says.

A spendthrift clause prohibits the trustee from transferring trust assets to anyone other than the beneficiaries. That includes an ex-spouse, creditors or even the IRS. “A spendthrift clause also says no beneficiary is permitted to assign, pledge or sell any interest in the trust — whether trust principal or income,” Gross adds.

If the trustee believes the distribution would be wasted or claimed by the beneficiaries’ creditors, a discretionary distribution clause gives your trustee the right to withhold income and principal distributions that would otherwise be payable to the beneficiaries.

4. Title bank accounts and assets properly

If you own joint assets or name beneficiaries on your accounts and assets, a creditor cannot seize what you leave behind after you die. Instead, the money will go directly to the person(s) listed on the accounts. But for the unsuspecting who haven’t titled their assets properly, there are pitfalls.

Scenario: A 58-year-old married traveling salesman died of a sudden heart attack. There was an $80,000 bank account in his name alone that had to be probated. His wife later discovered a $60,000 credit card balance, about which she knew nothing. It turns out the husband had a girlfriend on the side. After he died and the bank account went through probate, the wife was forced to use those bank funds to pay off the credit card bills.

How to prevent this: Make sure the spouse is named as a beneficiary on the bank account, which keeps the asset from having to go through probate. “If Dad dies and Mom is on the [bank] account, it’s hers,” Simasko says.

Adding beneficiaries to financial accounts is another creditor-busting move, since those assets avoid probate upon the death of the first account owner. But in this instance, it’s the deceased person’s creditors that won’t get access to the money, not the creditors of the beneficiaries.

Instead of having a joint owner listed on the title of certain accounts, a variation on this technique is to have a named beneficiary listed on your accounts, such as a 529 plan that may be for the benefit of a grandchild’s college education.

Another way to bypass probate and pass along the money to your heirs is to choose a payable-on-death (POD) or transfer-on-death (TOD) account designation. This differs from a joint tenant or co-owner arrangement because your heirs only have access to the fund after your death. Joint tenant and co-owners have access to the funds while you are alive.

“You deserve the peace of mind in knowing that your life’s economic work will be executed as specified, and your family will be grateful to you for not leaving them with the headache of trying to sort out your estate,” Abedeen says.

Read more related articles at:

How To Protect Your Assets From Lawsuits Or Creditors

Protecting Your Assets from Lawsuits and Judgments: Are You a Target?

Protecting Assets from Lawsuits and Creditors: Part 2

Also, read one of our previous Blogs at:

Do You Need An Asset Protection Plan?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

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