Whether you have a modest estate or you have amassed a veritable fortune, it is probably safe to assume that you want to protect the assets that make up your estate. Accomplishing this seemingly simple goal may be more complicated than you think, due in large part to the fact that your assets face more threats than you likely realize. To illustrate, the asset protection attorneys at Nash, Nash, Bean & Ford, LLP point out some of the obvious, and hidden, threats to your assets.
Threats to Your Assets
Most people are aware of some of the more obvious threats to their assets; however, some less obvious threats could just as quickly diminish the value of your estate.
- Divorce – even in states without community property laws, a divorce could seriously threaten your assets if you do not make a conscious effort to protect them. All states acknowledge separate property in some form, usually defined as assets owned prior to marriage or inherited during the marriage. What many people do not realize, however, is that co-mingling separate property can convert it to marital property. In addition, income derived from separate property is often considered marital property. Anything considered marital property is fair game for division during a divorce unless you took steps to protect it before the marriage.
- Spouse – you may be aware that you could be held liable for debts of your spouse; however, are you also aware that jointly held property could be lost because of a spouse’s debts or liabilities? Do you know how your marital assets are currently titled? People often pay little attention to the exact wording on a deed or title. What they don’t understand is that the type of joint title used can make a huge difference in how secure your interest in the property is.
- In–laws – imagine working your entire life to build up your assets to the point where you know your children will be well provided for even after you enjoy a comfortable retirement. Although you won’t be here to see it happen, after you are gone, the sizeable inheritance you left your son is lost to his wife in his divorce or the inheritance you left your daughter is squandered by her husband.
- Business liabilities – contrary to popular belief, incorporating a business does not always shield you from personal liability. “Piercing the corporate veil” could put your personal assets at risk for debts or liabilities of a business you own or in which you have an ownership interest. Careful business succession planning can help.
- Long-term care – although you may prefer not to think about it, you stand about a 50 percent chance of needing long-term care when you enter your retirement years. The cost of that care could diminish the value of your assets in record time if you are forced to use them to pay for that care out of pocket. Medicaid may be able to help; however, you must first qualify for Medicaid. If you did not include Medicaid planning in your estate plan ahead of time, you may be forced into Medicaid “spend-down.” Use up your non-exempt assets until the value of those assets falls below the Medicaid “countable resources” limit. Only then will Medicaid start covering your expenses.
- Beneficiaries – your own beneficiaries could be the biggest threat to your hard-earned assets. Once a direct gift is made to a beneficiary, there is nothing anyone can do about how the beneficiary spends those funds or handles those assets. A beneficiary could lose everything to a drug or gambling problem or just because of poor money management skills.
- Estate taxes – all estates are subject to federal gift and estate taxes at the rate of 40 percent. If the combined value of all lifetime gifts and assets owned at the time of your death exceeds the current lifetime exemption, your estate will owe gift and estate taxes, meaning your nest egg is once again at risk. Furthermore, the State of Illinois or Iowa also imposes a state level estate or inheritance taxes that can add to the threats your assets may face.
Contact Asset Protection Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding the numerous and varied threats to your assets, or how to protect against those threats in your estate plan, contact the experienced asset protection attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.
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