When planning your estate, one important consideration is protecting your assets from creditors. Creditors may include anyone you owe money to, such as banks, credit card companies, and individuals who have won a lawsuit against you. Here are some strategies you can use to protect your estate from creditors:
- Create an irrevocable trust: An irrevocable trust is a legal arrangement that allows you to transfer ownership of your assets to the trust, removing them from your estate. Since the assets in the trust are no longer in your name, they may be protected from creditors. However, it is important to note that once assets are transferred to an irrevocable trust, they cannot be returned to your ownership.
- Consider a homestead exemption: Some states offer a homestead exemption that protects a portion of your home’s value from creditors. This exemption can vary by state and may have certain requirements, such as a cap on the amount of equity in the home that is protected.
- Maximize retirement account contributions: Retirement accounts, such as 401(k)s and IRAs, are generally protected from creditors. By maximizing contributions to these accounts, you can ensure that a larger portion of your assets are protected from creditors.
- Purchase liability insurance: Liability insurance can provide protection in the event that you are sued. It is important to work with an experienced insurance professional to determine the appropriate amount of coverage for your situation.
- Use a business entity: If you own a business, it may be beneficial to operate it as a separate legal entity, such as a limited liability company (LLC) or corporation.
It sounds simple, but there are other details you need to understand. These are just the basics. Contact our law firm via phone at 817-899-3286 for more guidance. We’ll show you the way to ensure that your estate is kept safe.
Brandon McGee enjoys a successful law practice focusing on estate planning, elder law, Medicaid preplanning and crisis planning, and probate. Brandon and his team combine legal skills with compassion and understanding to develop estate plans that are personalized to the needs of each of their clients.
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