Effective estate and financial planning should include a thorough asset protection strategy. Asset protection planning happens through the use of legal tools that help individuals or businesses protect assets from creditors, lawsuits, and other financial threats. Many people use asset protection as a means of preserving assets or wealth until a future date or ensuring that family wealth safely passes to succeeding generations.
When you have questions about asset protection planning and which strategies to choose for you and your family, turn to Peakstone Law Group, formerly known as Patterson Weaver, for help. We empower our clients with dedicated service and savvy legal strategies. At our firm, you can expect our team to treat you like a person, not a file number. We’ll ensure that you understand your legal options and make ourselves available 24/7 to give you the help you need when you need it.
Contact our firm today for a free initial case evaluation with an asset protection attorney in Colorado Springs. You can get the answers you need from our asset protection lawyers and start developing a tailored asset protection and estate plan that preserves your family’s wealth.
Why Asset Protection Planning Is Important
Asset protection is a type of financial planning that aims to protect wealth from creditors, financial liabilities, and poor financial and personal decisions.
As people age, they accumulate assets they want to protect for their own use and to provide for the loved ones they’ll leave behind. You may want to ensure your family can always keep the home you’ve worked hard to buy, or you may want to provide your children or grandchildren with a financial head start when they go to college or begin their adult lives.
Asset protection ensures that you can put your hard-earned wealth out of the reach of creditors and achieve your estate planning goals, including having the resources you need for your advanced years and passing on inheritances to your loved ones.
Do I Really Need to Consider Asset Protection?
Even though you currently may not have significant debt or liabilities, your financial circumstances could suddenly change. For example, you may incur substantial medical debt due to a health emergency, or you may become a defendant in a personal injury case.
Unexpected debts and liabilities can wipe out a lifetime of hard work and wealth-building. Having an asset protection strategy in place will ensure that you and your family have the tools you need to protect and preserve your wealth.
How Can You Protect Your Assets from Creditors?
You may have multiple avenues to protect your assets from seizure by creditors. Some of the most used asset protection strategies include:
- Asset protection trusts – Individuals and families may set up one or more trusts to hold assets to shield them from creditors. When structured properly, an asset protection trust can name the original asset owner as a beneficiary, enabling them to continue enjoying or benefiting from the protected assets.
- Irrevocable trusts – Most asset protection trusts use the irrevocable form of trust. Irrevocable trusts provide more robust protection from creditors because the grantor who funded the trust cannot withdraw or control those assets.
- Offshore trusts – Depending on the type of creditors a person wants to protect their assets from, foreign or offshore trusts can provide an additional layer of protection as assets in those trusts remain out of reach of U.S. courts. However, people considering setting up an offshore trust should carefully evaluate the legal, political, and financial circumstances in the jurisdiction where they plan to establish their trust.
- Spendthrift trusts – These trusts enable families to pass personal assets and inheritances to loved ones without worrying that a loved one might dissipate their inheritance due to heavy debt, poor financial decisions, or personal issues like gambling or substance addictions.
- Special needs trusts – Families with a loved one with special needs who receives means-tested government benefits can use special needs trusts to protect the individual’s assets, such as inheritances or personal injury awards, while preserving their benefits eligibility and providing an income stream to increase their quality of life and financial stability.
- Medicaid planning – People who expect to require long-term skilled nursing care may engage in Medicaid planning to ensure their eligibility for benefits to help cover the cost of long-term care. Medicaid planning usually involves sheltering assets to meet Medicaid eligibility thresholds while still allowing assets to pass to loved ones.
- Declarations of homestead – Most states allow homeowners to obtain a homestead exemption, which protects a certain amount of equity in a primary residence from seizure by creditors (other than mortgages on the property).
- Tax-free gifts – Families can use tax-free gifts as an asset protection strategy in an estate plan. State and federal tax codes permit people to gift up to a particular dollar value of cash or assets without the donor or recipient incurring any tax liability.
Which Creditors Can Sue Me?
A person may incur financial obligations to various parties who can pursue payment through the courts. An asset planning protection strategy can shield assets and wealth from seizure by creditors such as:
- Student loan providers
- Credit card companies
- Auto loan providers
- Personal loan providers
- Mortgage holders
- Medical providers and medical debtholders or lienholders
- Judgment creditors (for example, personal injury or breach-of-contract judgments)
- Former spouses or partners (for example, property division, alimony, and child support)
Should I Combine My Estate Plan with Asset Protection Planning?
Your estate plan should consider asset protection a key goal. Estate planning ensures you have the resources you need as you age and develops a strategy to pass your hard-earned wealth to your loved ones after your death.
Asset protection in estate planning can help you reduce your family’s financial liabilities, including estate taxes and liabilities to current and future creditors. As with estate planning, your asset protection plan will evolve as your personal, familial, and financial circumstances, goals, and priorities change.
Contact Peakstone Law Group for Comprehensive Asset Protection Planning Advice
When you need help developing an effective asset protection strategy in Colorado Springs, turn to Peakstone Law Group for tailored estate and asset protection solutions from our knowledgeable wealth preservation attorneys in Colorado.
Contact our firm today for a free, confidential consultation to discuss the asset protection tools our team can use to help you protect your legacy. We’re ready to help you and your family plan for the future.