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Estate Planning: Long-Term Asset Protection

Estate planning strategy that protects your assets

Changed Circumstances Change Estate Planning

You’ve done well for yourself in business. Expensive homes. Decked-out cars. High-rise office building downtown. Exclusive membership to the elite golf clubs. You’ve got it all! Somehow, amidst the crunching numbers and closing deals you found love too. You’re married with three lovely children – your most prized possessions. You created estate planning documents when you first were married, but circumstances have changed. You have a family now. And, your assets and income stream has increased substantially over the years. As the saying goes, more money means time for more estate planning, or something like that… As your net worth increases, you need to refresh your estate planning documentation to ensure it’s up to date and consider additional strategies to protect your savings and favorite Benz.

Top 5 Rules to Protect your Assets

A properly crafted comprehensive estate planning scheme considers the following five rules:

Estate planning documents in combination with strategic investment leads to not having all your eggs in one basket

Maintain Sufficient Insurance

Maintaining ample insurance coverage for your home, car, and healthcare needs, as well as an appropriate amount of life insurance is a must. Unfortunately, the more you have the more coverage you’ll need. Home and auto insurance policies provide limited protection from personal injury lawsuits.  You should obtaining additional “umbrella” personal liability coverage to match your net worth. Personal liability policies don’t cover work-related lawsuits. Business owners have special concerns and should consult an insurance expert regarding appropriate business coverage.

  • Example: Your net worth is $500,000. Your homeowner’s policy provides $100,000 in coverage. Acquiring a personal liability policy with “umbrella” protection for $400,000 would provide complete coverage.

Create Living Trust

Your estate is subject to probate if you’ve only created a will and not a living trust as part of your estate planning documentation. A living trust established as part of your estate planning package avoids probate. It also helps to protect your estate from creditors and maximizes tax savings for your loved ones.

Adopt Tax-Smart Plan

Reducing taxes protects your income by allowing you to keep more of what you earn. Your estate planning strategy should attempt to reduce your income taxes. Investing in retirement accounts like 401(k), 403(b), or any of the various IRA‘s is one of the best ways to reduce taxes on earned income. This in turn means more money for you and your loved ones.

Title Assets Wisely

How you title your assets (home, car, brokerage account) is crucial to implementing an effective estate plan. There are various ways to title property in California. The main thing to remember is that you should title property in relation to your overall estate planning strategy.

  • Example: Listing an adult child on title to real property as joint tenant bypasses the probate process. However, as we’ve learned in previous post, titling property this way subjects your estate to the joint tenant’s personal liabilities, such as unpaid bills or contract disputes. This superior method is to create a living trust, which avoids probate and creditor problems, while also allowing you to control the asset(s) during your lifetime.

Diversify Portfolio

Portfolio diversification is a strategy to be employed side-by-side with your estate planning scheme. The basic concept – don’t put all your eggs in one basket. In addition to your estate planning attorney, you’ll want a CPA and an investment advisors working with you and together to optimize protection of your assets.

About Sean Hanley

Practicing law since 2007, Sean specializes in the ever-changing laws related to real estate, business and estate planning. Embracing technology with a focus on personalized service, he understands the challenges of living and thriving in Silicon Valley. Tapping into his education in economics and business administration, Sean also serves on the non-profit Willow Glen Business Association.

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