What an individual accumulates during their lifetime can help to ensure their comfort as they age. Their resources can also make a major difference for their close loved ones and dependent family members.
Someone who has started a business, acquired real property or otherwise accumulated valuable resources may aspire to pass as much of those assets on to specific beneficiaries as possible. Asset protection planning is often an important aspect of modern estate planning.
Why do people have to think about preserving their assets for their beneficiaries?
Beneficiaries don’t have first priority
Asset protection plans aren’t just for the incredibly wealthy who have multi-million dollar estates. Even those with relatively standard personal holdings including a primary residence and retirement savings could benefit from asset protection planning.
When someone dies, their property becomes the property of their estate. The estate also has responsibility for all of their personal financial obligations. From income taxes to student loans, someone’s debts and financial obligations when they die are a first priority during the probate process.
Beneficiaries may not inherit anything from the estate if someone owes thousands in student loans and has end-of-life care costs. Asset protection planning helps ensure that creditor claims and probate costs don’t leave someone’s beneficiaries with nothing to inherit.
Retired living can be unpredictable
Asset protection planning isn’t just about ensuring a legacy for the beneficiaries of an estate. An asset protection plan also provides someone with a degree of security during their retirement years.
The choices made during asset protection planning can reduce the likelihood of creditors taking legal action against someone’s financial resources during their golden years. Someone who is subject to a lawsuit because they caused a car crash or fell behind on their bills could lose their most valuable assets because of the litigation that occurs.
Asset protection planning that occurs prior to creditor lawsuits can help shield the resources that people depend on during their retirements from the possibility of creditor claims. People can then feel more confident about maintaining a certain standard of living during their golden years even if something happens that leads to debt or litigation.
Asset protection planning helps ensure that someone doesn’t leave their loved ones without support after they die and can help protect older adults from extreme financial vulnerability in their last years of life. Taking the time to think about future financial challenges could help people feel more confident about their own future and the legacy that they hope to leave for others.