asset protection

Asset Protection: How To Protect Your Estate from Lawsuits - Frivolous or Otherwise

One of the questions we get from time to time is, "How do I protect my estate if I get sued?"

This is a slippery slope. The reality is that most consumers have liability insurance and they don't worry too much about getting sued and losing everything they own. But it seems that when "something happens" - like a car accident or some other event where one foresees personal liability exposure - panic sets in and the consumer immediately wants and needs to know what they can do to protect their assets.

For starters, the best time to protect your assets from lawsuits is NOT after an event happens that might trigger personal liability.

On another note, it is likely that you own some assets that are exempt from creditor claims, and you likely own some assets that are not exempt from creditor claims. Each state's exemption laws may be different so check with someone in your state who has a good understanding of your state's exemption laws.

Know that this can be a complicated topic, but when you do discuss asset protection with a professional, you'll likely discuss the exemption status of life insurance cash value, annuities, retirement accounts, limited liability company protection, and which types of trusts can provide you with creditor protection. If you discuss setting up trusts for asset protection, the discussion will likely move toward irrevocable spendthrift trusts in some form.

This is an area where it pays to get informed early - before something happens - and, if can't sleep at night because you are worried that a lawsuit, frivolous or otherwise, could wipe you out, then take whatever action you deem necessary to give you the peace of mind that your estate is protected.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

What Does "Asset Protection" REALLY Mean?

In this post we dig a little deeper about who wants to protect their assets and their estate from losing their estate to (1) nursing home expenses; (2) a lawsuit; and (3) government intervention.

People often call our office or request to discuss with me how they can "protect their assets." But different people, in different circumstances, have different ideas regarding what they want to protect their estates FROM.

One group of people asks me about how to protect their estate from long term care expenses. Perhaps they are 65 or older, and they have seen family members and friends be forced to deplete their estate, and even lose their home, sue to the costs they must pay to reside in a nursing home.

When we engage in a conversation about Long Term Care Medicaid eligibility, we have to take an in depth look at an individual's, or couple's, assets, monthly income, health, age, and the different rules that apply. Often we make some determination regarding what assets should remain in the individual or couple's name, and what assets, perhaps, should be transferred to some form of a trust. Not that the traditional "avoid probate" revocable living trust does NOT provide much in the way of protection from nursing home expenses. Also note that this form of "asset protection" is most effective when transacted at least five years before entering a nursing home.

The second theme of asset protection involves protecting assets you own in the event you get successfully sued. Sometimes people contact us and they are a nervous wreck because "something happened," (maybe the threat of a lawsuit, maybe an automobile accident where you were determined at fault, maybe someone injured on real estate you own, or maybe you have a serious illness and you are worried about the millions of dollars of potential health care expenses).

Two common obstacles I've seen to this kind of asset protection are: (1) People do not want to give up the control over what they own; or (2) people don't engage in this kind of asset protection until it is too late - whereby action could be later undone due to the rules on fraudulent conveyances and the intent to defraud creditors.

The third category of asset protection requests comes from those who, in general, want to protect their estate from "the government." When I ask follow-up questions and dig deeper, they often want to protect their estate from the various forms of taxation, and they want to keep their estate out of probate (the court system).

The solutions for these three categories of asset protection vary based on the appropriate set of laws, rules, and regulations that apply to your situation, and the solutions vary based on your particular financial and estate situation.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450