When you contemplate your estate plan, you probably focus on how you wish your assets to be distributed when you are gone. This is certainly an important aspect of estate planning; however, it may not even be the most important aspect. In order to have assets left to pass down to loved ones when you are gone, you must protect the assets you have while you are here. With that in mind, attorneys at Nash, Nash, Bean & Ford, LLP point out some of the less recognized potential threats to your assets and offer tips for keeping your assets safe.
Potential Threats to Your Assets
Your assets may very well be at risk from threats you have never considered. Although you may have thought about some of the potential threats to your assets, you probably have not thought of all of the following:
- Divorce – your own divorce can clearly be a threat to your assets; however, so can the divorce of a child or other beneficiary if he/she co-mingled an inheritance during the course of the marriage.
- Business failure – you may think you are protected from personal liability because you incorporated; however, it may still be possible to come after you personally for debts and/or liabilities of the business.
- Economic downturn – no matter how careful you are with your finances, an economic downturn could have serious consequences. If you are not careful, creditors could wind up with your assets to satisfy debts.
- Spendthrift beneficiary – imagine leaving a lump sum to a loved one who proceeds to blow through the inheritance in record time without anything of value to show for it?
- Long-term care – there is a very good chance that you will need long-term care at some point in time and that care will be expensive. If you failed to plan ahead, and cannot afford to pay out of pocket, Medicaid will likely be the only source of assistance. Qualifying for Medicaid, however, may require you to “spend-down” (sell) a significant portion of your assets first and use the proceeds to pay your LTC expenses until Medicaid chips in and starts covering your expenses.
Tips for Keeping Your Assets Safe
Once you have acknowledged various potential threats to your assets, you can begin to incorporate asset protection tools and strategies into your comprehensive estate plan to keep your assets safe. The following tips may be helpful:
- Sign a Prenuptial Agreement. Protect your assets against the possibility of loss during a divorce by entering into a pre-nuptial agreement if you are marrying for the second, or subsequent, time. Contrary to what many people believe, entering into a pre-nuptial agreement does not mean you have no faith in the marriage. It simply means you want to protect your children’s inheritance if the marriage ends.
- Guard against Loss to In-Laws. Your child’s divorce could be just as threatening to your assets as your own divorce. To protect against an in-law ending up with your hard-earned assets, use a family limited liability company or a trust to pass down family assets to adult children.
- Remove Assets from the Reach of Creditors. Create an irrevocable living trust to hold valuable assets during your lifetime and keep them out of reach of creditors.
- Think before Gifting. Be objective when considering gifts for loved ones. If you have an adult child (or other beneficiary) with a substance abuse or gambling problem, or who is simply not good with money, be realistic and admit the potential problem – then make sure you do not hand down a lump sum inheritance. Instead, try using a trust that can control the assets and the disbursements.
- Think ahead to the Need for Nursing Home Care. Prepare for long-term care costs by including Medicaid planning in your estate plan. Look into long-term care insurance For many seniors, the single largest expense they will have during their retirements years is the cost of long-term care. Because you may end up turning to Medicaid for help with those costs, it is always best to think ahead and include Medicaid planning in your comprehensive estate plan now.
- Consult with an experienced Illinois estate planning attorney. Asset protection tools and strategies can help you protect your hard-earned assets; however, doing so is a highly individual and personal process. Consulting with an experienced attorney is the best way to ensure that the tools and strategies you implement and use are best suited to your needs and goals.
Contact Asset Protection Attorneys
If you have questions or concerns regarding asset protection in the State of Illinois, contact the experienced Illinois estate planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.