Individuals and families with up-to-date and comprehensive estate plans may think their work is done in protecting their assets. But many types of assets could use additional protection before death or incapacitation, which requires a more holistic strategy than many estate plans cover. And some individuals may need asset protection plans more than others, while everyone should have an estate plan in place. Asset protection strategies can protect your wealth from seizure or other losses. Asset protection and estate plans often coexist, but both sides need individual consideration and attention.
Why Do I Need Protection?
You may think your assets are relatively secure, but this can be a mistake. Even the most financially stable of individuals may fall into circumstances that lead to creditors at the door. And high net worth individuals or individuals in high-risk professions such as doctors and lawyers may be targets for lawsuits and scam artists, which can result in high damages awards or unwitting asset transfers without strategies in place to mitigate these losses and shield assets from these claims. Spouses and in-laws can also serve as surprising asset predators, especially if marriages dissolve and tensions become hostile, even if planning for that unfortunate possibility seems difficult to imagine. Finally, hefty taxes can be imposed on certain asset types by the government, which can be protected by certain trusts and a good tax strategy.
Which Assets Need Protection?
It may follow from the above that all assets should be protected. But there is no free lunch—asset protection takes time and expense. It may not be worthwhile to protect every asset. You should ask yourself three questions when determining which assets should be protected. First, which assets already have protection? Many assets are already insured or otherwise protected, such as properties through homeowners’ insurance or bank accounts through government assurances such as federal deposit insurance. Second, what is unprotected that you would like to have protection for? This could include other real estate, business assets, and even intellectual property and inheritances. Finally, what are you willing to give up to protect those assets? For example, reorganizing a sole proprietorship to a limited liability corporation or partnership can cost money and require maintenance, but protect personal assets from lawsuits. These tradeoffs can have costs—whether monetary, through a transfer of risk or a lesser degree of control—and all should be considered. In sum, income-producing assets and family assets may be worth more protection than more stable assets such as bank accounts.
There is a multitude of asset protection strategies, but not every strategy works for every individual or every asset. It’s key to work with an experienced estate planning attorney to figure out which strategies will work best for you, your family, and your unique assets.
Contact a Houston Estate Planning Attorney Today
To discuss your options for asset protection, contact the experienced estate planning attorneys at McCulloch Miller, PLLC. Our Houston-based team has over 30 years of experience in taking a holistic approach to estate planning strategies and long-term care. Contact our office at 713-936-9073 to schedule an initial consultation with an attorney on our team.