Asset Protection Planning
Asset protection planning is an important part of your estate plan. If you’re like most people, you have worked hard your entire life to earn and save your assets. And, you would like to give a gift to your children during your lifetime or after your death. Either way, ask your estate planning attorney how to incorporate asset protection planning into your estate planning so that your gift is not taken in a divorce.
More than half of us get divorced. It’s part of our way of life and therefore must be part of our asset protection planning and estate planning. You can protect your gift to your child by giving the gift in a trust, instead of outright. Picture a trust like a lock box. Your child is the only one with the secret combination to the lock box. She still has full access to the monies for her own benefit (and that of her children, if you’d like), but if she gets divorced… your gift cannot be taken in a divorce property settlement.
If you forgo asset protection planning and give the money to your child in her individual name, your gift may be taken from her and given to her ex-husband. Instead of giving your gift in a lock box, it’s like just tossing a pile of cash at her in hopes that she’ll be able to catch it in the middle of a wind storm.
By including asset protection planning in your own estate planning, you can give a gift to your child that you cannot give to yourself. If your child gets divorced or suffers bankruptcy, business failure, medical emergencies or is sued, your gift is protected and will be used only for your child’s benefit.
It is in your best interest and the best interests of your children to include asset protection in your estate plan. Consult with an estate planning attorney to ask how.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.