Every person leaves a legacy, a way for their families and friends to remember them. Legacies can consist of favorite memories, belief systems, and tangible assets like homes or financial accounts. No one can take away the memories you leave, but how can you go about protecting your tangible assets for the next generation?
What does asset protection have to do with the next generation?
Asset protection means a way of organizing assets “in advance to guard against risks.” Risks may include claims made:
- by creditors against your estate after you have passed away;
- by an ex-spouse;
- during a bankruptcy matter; and
- because of a lawsuit against your beneficiary.
Estate planning and asset protection go hand-in-hand. Your estate plan allows you to organize in advance how your property will be distributed after your death. The executor of an estate finds out if the estate has any creditors, then pays valid claims if money is available. Asset protection preserves more of your estate for your heirs.
Are any assets already safe?
Some assets will be protected by state or federal exemption laws. Property exempted by Arizona law includes:
- Homestead – Currently, $150,000 of your equity in a homestead is protected from creditors.
- Household goods. Furniture, electronics, and appliances up to $6,000 may be safeguarded.
- Personal items. The list of personal items that may be exempt includes, but is not limited to, clothing, musical instruments, domestic animals, engagement and wedding rings, books, and so on. There are nominal dollar value limits on these items.
- Certain income and judgments – Some benefits, income, proceeds from judgments, and retirements accounts are protected. Discuss these with your Arizona estate planning attorney.
What steps can be taken to protect other assets?
Resources not exempted by law need their own layer of protection.
- Non-exempt assets sometimes may be converted to exempt assets.
- Certain business entities offer protection from liability and creditors.
- A family limited partnership may save assets for future generations.
- Irrevocable trusts may protect assets, but there are restrictions and limitations.
- Asset protection trusts can reduce the likelihood that personal property will be seized by creditors.
Don’t wait until your assets are in danger.
If your assets are already being targeted, it may be too late. Transferring property close to or after a judgment against you may be fraudulent. Make asset protection part of your estate plan before it is needed.
Leave more property to your heirs than to potential creditors.
Find out more about your estate planning options by watching some of the free videos on our website, keystonelawfirm.com. For more information or to set up an appointment with a qualified Arizona estate planning attorney, give us a call at (480) 209-6942.