Many of my clients are deeply concerned about how litigious our society has become and fear that their assets may one day be taken by creditors. As a result, they desire to legally protect their assets from creditors, including the possibility of divorce. There is a way that clients can asset protect their inheritance, providing an important piece of the overall estate planning puzzle.
The traditional estate planning process focusses exclusively on passing assets downstream to beneficiaries (i.e. children and grandchildren), often ignoring a potential inheritance from parents or other family members. However, Americans are living longer and longer, and trillions of dollars will change hands in the coming decades. Most of these assets will be transferred in a manner that fails to protect them from the claims of creditors and former spouses.
The laws of most states, including North Carolina, do not recognize any asset protection for a "self-settled trust" - an irrevocable trust you establish for yourself. Therefore, once you receive an inheritance, you cannot easily asset protect the inheritance. The inheritance, however, could be asset protected by creating a trust to receive the inheritance for you.
Such a trust legally protects the inheritance, while alo allowing you access to the funds as well. It can also remove a substantial portion, if not all, of the inheritance from being subject to estate tax at your death.
No comments:
Post a Comment