How You Can Keep Claims From Threatening Their Property<\/p>\n
Most of us do not expect to be sued. However, lawsuits are filed every day the courthouses are open. If your clients\u2019 estate plans don\u2019t include adequate asset protection, they could end up losing a substantial amount of their wealth in the event of a claim – even a \u201cfrivolous\u201d one.<\/p>\n
It\u2019s well worth talking to your clients about what asset protection strategies their current plan includes. Many existing plans may need a revamp, while other clients will need to implement a new plan entirely. Shielding their assets and property against legal claims takes sophisticated planning and teamwork. We\u2019re here to help you develop a tailored asset protection strategy for each of your clients.<\/p>\n
Several issues and strategies merit examination in your asset protection conversation with your clients.<\/p>\n
Domestic Asset Protection Trust (DAPT): DAPTs can protect your clients from a legal claim that may arise in the future by allowing them to place their assets into a special trust that protects them from the reach of a creditor. DAPTs aren\u2019t available in every state, and the most popular states for DAPTs are Alaska, Delaware, Nevada, and Wyoming. DAPTs are a sophisticated strategy that\u2019s not right for everyone. But, for the right clients, they are a potent tool for protecting assets. Like any sophisticated legal and financial strategy, it\u2019s best to work with a team.
\n Planning Tip: Another option is an offshore asset protection trust established under foreign laws. However, placing your clients\u2019 assets out of the U.S. adds significant tax reporting burdens. Also, court orders for asset repatriation can lead to a client being held in contempt of court. Because of the ongoing tax compliance, fiduciary fees, and overall complexity of these foreign trusts, offshore planning is usually not a great option for most clients.
\n Lifetime Trusts: Lifetime trusts protect your clients\u2019 beneficiaries\u2019 inheritances. Think of this tactic as asset protection for the next generation. Although it does not provide any asset protection benefit for your current clients, these trusts can secure the financial well-being of their children after they\u2019re gone. Additionally, assets left in lifetime trusts need long-term management, providing you a valuable opportunity to be introduced to and work with the next generation.
\n Inheritor\u2019s Trusts: Inheritor\u2019s trusts are an excellent choice for clients who expect to receive an inheritance. Rather than acquire assets outright or through a less-than-ideal trust set up by their family (usually parents or grandparents), your clients can strategically secure their inheritances with this type of trust. These trusts work best when they are coordinated with the client\u2019s overall plan. Any client – especially well-off ones – expecting a large inheritance should consider this option.
\n Risk Management Planning: Setting up a corporation, LLC, limited partnership, buying appropriate insurance, negotiating contracts effectively, using retirement plans and other exempt accounts, and other strategies are all part of what we could call risk management planning. Some of these may be built into your clients\u2019 estate plan while others may be part of your client\u2019s business plans. Many clients have not taken the time to develop a risk management strategy fully, but it is well worth the effort since many of these strategies are \u201clow hanging\u201d fruit, especially compared to more sophisticated strategies like DAPTs. <\/p>\n
No matter what kind of asset protection strategies you help your clients implement, make sure they don\u2019t sleep on it. Planning of this type should not be delayed or neglected. Effective strategies like these only protect your clients when they\u2019re put into place early enough \u2014 well ahead of a lawsuit, credit claim, or bankruptcy. For clients who have already implemented one or more strategies, it is also a great time to review and ensure the plan will work as expected. Many trusts – even \u201cirrevocable\u201d ones – can be modernized (and their benefits possibly enhanced) using tools like a modification or decanting. Of course, the traditional concerns of estate planning, such as client privacy, freedom to determine who will be in charge of their assets, and reduction of income and estate taxes, must be addressed. Asset protection lets you improve your value to clients by enhancing client control over their property.<\/p>\n
Planning tip: The Tax Cuts and Jobs Act of 2017 also impacts your clients\u2019 asset protection needs. Far fewer individuals and married couples will have to pay inheritance taxes because of it. However, it also means that lawsuits \u2014 even \u201cfrivolous\u201d ones \u2014 can still spell trouble for your clients. Bankruptcy and divorce can also come into play here, so protective planning to protect and preserve assets is extremely important, even as estate taxes have receded in importance.<\/p>\n
We\u2019re here to help you and your clients.
\nYour clients trust that you have the expertise to guide them toward their financial goals, and that often means pulling an estate planner into the conversation as part of their team of experts. Give us a call today to chat about how we can build asset protection into your clients\u2019 plans.<\/p>\n","protected":false},"featured_media":0,"template":"","newsletter_categories":[4],"acf":[],"yoast_head":"\n