Although the primary goal of your estate plan may be to create a roadmap for the distribution of your assets after your death, a comprehensive estate plan can accomplish far more by including estate planning tools and strategies aimed at accomplishing related goals and objectives. For example, throughout your lifetime you undoubtedly work toward building your estate assets so that you can live comfortably during your Golden Years and – hopefully – have a nice nest egg left to pass down to your children, grandchildren, or other loved ones. Both of those goals could be threatened, however, if your assets are put at risk – and your assets could be at risk without you even realizing it. The best way to protect your assets, your future, and your loved ones is to include asset protection planning as a component in your comprehensive estate plan. Consulting with an experienced Illinois estate planning attorney is always the best way to decide how to include asset protection in your estate plan; however, it may also be beneficial to learn more about some commonly used estate planning asset protection tools and strategies.
How Could Your Assets Be at Risk?
Unfortunately, your assets can be threatened in a number of ways that you may not have considered, including:
- Creditors of yours – you may be someone who never pays a bill late and who manages to maintain a stellar credit rating; however, the unexpected can happen. An unexpected illness, a downturn in the economy, or a tragic accident could cause you to suddenly find you scrambling to pay our basic living expenses. If that happens, you may find creditors going after your assets.
- Creditors of a spouse or business – your own financial practices may not even matter if you are held liable for debts of a spouse or business.
- Spendthrift beneficiaries – every family has at least one – the family member who just cannot handle money or who has an addiction that causes him/her to squander money. You may wish to provide for this individual in your estate plan but don’t want to put your assets at risk in the process.
- Medicaid – during your “Golden Years” you may need to qualify for Medicaid benefits in order to defray the high cost of long-term care. If your assets are not already protected, you may need to rely on them first before Medicaid will kick in and start helping.
How Can You Protect Your Assets?
One of the most effective asset protection estate planning tools is an irrevocable living trust. A living trust is often used as part of an asset protection strategy. However, it must be the right type of living trust. Only an irrevocable living trust can help protect your assets because the key to asset protection is legally removing the assets from your estate. Assets transferred into a revocable living trust may remain accessible to you because of your ability to modify or revoke the trust. Assets transferred into an irrevocable living trust, however, are legally owned by the trust and no longer under your control once transferred. Because the assets are no longer owned by you, they are out of the reach of creditors. You may still be able to benefit from the assets though. A properly drafted assets protection trust can be set up to include you as a beneficiary of the interest earned on the trust assets. A Medicaid trust, for example, is a specific type of living trust that can protect your assets while removing them from your “countable resources” for purposes of qualifying for Medicaid benefits when you need them. You may continue to benefit from the interest earned on the trust assets but the assets themselves become the property of the trust and will eventually be distributed to the beneficiaries you named in the trust – usually children and/or grandchildren.
If you have additional questions or concerns about asset protection in the State of Illinois, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.