Eight Basic Asset Protection Techniques


As with any other major transaction, it is always advisable to seek the advice and care of an attorney when creating and implementing your estate plan, but out of laziness or financial inability, many Americans still fail to plan for the protection of their assets. If you are unable to retain the services of an estate planning lawyer to work with you on your asset protection plan, follow at least the eight steps below and ensure that your family only ends up with a big pile of debt. As the old saying goes, if you don’t plan, you actually plan to fail.

Step 1 – Sign a Financial Power of Attorney.

A financial power of attorney designates an agent of your choice to manage your financial affairs if you become incapacitated. This person can pay your bills, file your taxes, and manage your investment, retirement, and life insurance accounts. Without a financial power of attorney in place, your family will need to get permission from the court to intervene, which will cost them valuable time and money.

Step 2 – Designate a health care surrogate.

A health care surrogate is essentially a power of attorney for your personal well-being. The surrogate will make health care decisions for you when you cannot and will ensure that your living will is executed correctly, so that the end-of-life measures you choose are carried out according to your specifications. . In addition to designating your healthcare surrogate, you must also prepare your living will.

Step 3 – Calculate your net worth.

Start by listing your most important assets and their current market value. This can include your home and any vehicles you own. Next, you’ll want to add your most liquid assets, such as checking and savings accounts, cash, CDs, or other investments such as retirement accounts. Add to that the current market value of any personal items that may be valued over $500. This number represents your total assets. Now make a separate list of all major outstanding debts such as your mortgage or car loan balance. Add to that all your personal debts such as credit cards, student loans or any other debt you may have. This number represents your total liabilities. If you subtract the total liabilities from the total assets and you will have your net worth. Keep this figure handy when speaking with your estate planning attorney, financial advisor and accountant.

Step 4 – Review your beneficiaries.

Each year, you should review the beneficiary forms on file for all your bank accounts, retirement accounts, and life insurance policies. These forms will determine who inherits most of your assets. If your spouse is listed as a beneficiary on one of these accounts, you should list your children as potential beneficiaries in case something happens to your spouse. If your spouse predeceases you, this will allow your children to place their inheritance in an inherited IRA and extend distributions and tax deferral over their lifetime. It could save your kids thousands in taxes.

Step 5 – Write a will or update the one you have.

Without a will or a living trust, the assets you’ve worked so hard over your lifetime to accumulate will be distributed as you see fit in the state you live in. If you have had a major life change since you wrote your will (such as a marriage, divorce, birth of a child, or death of an immediate family member), the division of your estate may become very complicated without an updated will. To further protect your family, you should speak with your estate planning attorney about setting up various trusts and tax shelters that can help preserve your estate for future generations of your family.

Step 6 – Plan for state property taxes.

Currently, Florida does not levy a state estate tax, although things were different prior to January 1, 2005, when Florida, like many other states, levied a state estate tax. separate in addition to the federal estate tax, known as the “pickup tax.” The pickup tax was equal to a portion of the overall federal estate tax bill. tax breaks will expire and inheritance tax, as well as collection tax, will revert on January 1, 2011. In 2011, your estate may be doubly taxed.2010 will be an “uncapped” year in the as the EGTRRA will no longer provide protection for individuals with a net worth of less than $1 million.With more and more families exposed to estate taxes, it is imperative that you sit down with your estate planning lawyer and that you talk about drafting a combination of wills and trusts as soon as possible.

Step 7 – Properly title your assets.

A married couple whose wills have set up a credit shelter trust in order to preserve the estate tax exemption of the deceased first spouse without bankrupting the surviving spouse must retain their titled assets in the name of each spouse separately or they will not be eligible for the benefit. If they instead wish to have their assets distributed through living trusts, they should remember to rename their assets to the name of the trust. If you don’t name your assets correctly, you risk frustrating your specific intentions when developing your asset protection plan. If you are unsure how to title your assets in a way that will ensure the desired outcome, you should contact your estate planning attorney and request a consultation.

Step 8 – Be generous.

Anyone can give up to $13,000 a year in cash, stocks or other property to another person without worrying about gift or estate tax consequences. A person is also allowed to pay for another person’s tuition at a college or private school, as long as the check is sent directly to the school, in addition to the $13,000 gift allowance. The same goes for medical expenses, as long as the check is sent directly to the health care provider. You also have the option to give up to $1 million to anyone and receive a lifetime tax exemption on donations. As the old saying goes, give and you shall receive.

While these eight steps provide you with basic protection, for a true and comprehensive asset protection plan, please contact your estate planning attorney and work together to create a plan for your future and your family’s financial future for the generations to come.

Source by Michael D. Wild

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