Asset protection is a preventative measure designed to protect a client?s assets from creditors. It is a form of estate planning that involves a legal and ethical review of a client?s financial holdings, then the restructuring of those holdings to take advantage of various techniques and legal exemptions that seek to place those assets beyond the reach of potential creditors. In addition to insulating assets from creditor attack, asset protection planning can allow you to negotiate a favorable settlement with creditors from a position of strength.
If you leave your spouse or any beneficiary with assets in trust, and the trust agreement is properly drafted, those assets will not be subject to claims of your spouse?s or beneficiary?s creditors. ?An example of asset protection can better clarify.
A client made a mistake on a tax return that led to a sizable underpayment, but the client had run into financial problems after the return was submitted.? By the time the IRS started pursuing collection efforts, the client was on the brink of financial ruin.? But the IRS started pursuing collection efforts?garnishing wages, seizing accounts, the whole deal.? Fortunately for the client, the client?s parents set up a trust for the client that was funded with $200,000.? The client was the trustee of this trust and had the trust purchase the client?s house, instead of trying to purchase the house by himself.? The house is considered an investment of the trust, and the IRS can?t foreclose on it or ever use it to satisfy its claim against the client.
This same client also could have bought the house himself and used trust assets to pay the mortgage.? If the trustee makes the mortgage payment directly to the lender and the client never receives the assets, the assets are never subject to the IRS?s claims.? The IRS could still foreclose on the house or place a lien on the house, but the client at least wouldn?t have to worry about keeping both the IRS and his lender at bay.
In either case, if the IRS never relents and eventually forces the client into bankruptcy, what was given to the client in trust will never be touched.? The client would come out of bankruptcy debt-free, and with all of the trust assets still intact.? If the trust was never set up and the client?s parents gave him $200,000 outright, it would have been snatched up by the IRS relatively quickly.
Cost of Asset Protection
There is additional time and legal fees that go into creating the trust, and they do require some effort to administer. ?Most client consider the additional investment above and beyong the cost of a simple wil a good one, once they understand the protection a trust offers.
If you would like to explore the possibility of asset protection, call 919-683-9500 to speak to an attorney.
Source: http://www.durhamtrafficlaw.com/what-is-asset-protection/
weiner mobileme skyrim halo 4 macrumors apple wwdc mila kunis
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.