It’s nice that the NFL is able to reverse mistakes by using instant replay. Unfortunately, there is not instant replay for mistakes made in the estate planning process. The Estate Tax will jump up to 55 percent in just three months. Are you certain that you are protected? Call the estate planning attorneys of Wild Felice & Pardo for a free consultation and put your worries to rest.
1. Waiting too long to start planning. The longer your asset protection plan has been in place, the stronger it will be. It will also cost less to do the planning long before you have a problem. Once a lawsuit has been filed against you, any transfers you make can be overturned. In order to battle a lawsuit effectively, make sure you have an asset protection plan in place long before you need it.
2. Mistakenly committing fraudulent transfers. If you transfer assets to a friend or family member in order to avoid losing them during a settlement, you may find it does you no good. This is not illegal, but the courts can reverse the transfer and hold the transferee partially responsible.
3. Trying to hide your assets. This is no longer possible. Even moving assets offshore does not prevent them from being discovered. Eventually, lawyers will uncover the existence of the asset. In some cases, having the asset offshore may protect it, but it will not prevent it from being discovered.
4. Assuming you can outsmart the creditors. Those trying to collect their debt and the lawyers working for them have done this before. You will not figure out a way around the system.
5. Handing control of your assets over to someone else. Often called the “poor man’s” asset protection, signing over your wealth to another person is never a good idea, even if he is a trusted friend or family member. You may have to give up some control at some point, but deciding you will protect your assets by giving them over to a sibling or adult child is a mistake. Discuss your options with an experienced asset protection attorney before proceeding.
6. Assuming asset protection and estate planning are the same thing. Asset protection is part of any strong estate plan but they are not the same thing. It is important to remember a living trust does nothing to protect you from creditors.
7. Confusing bankruptcy law and asset protection law. In a state like Florida, newer bankruptcy laws do not affect the unlimited homestead exemptions. You have less protection in bankruptcy court, so filing for bankruptcy should be used as a last resort.
8. Assuming it is too late to establish an asset protection plan. It is never to late to do this. Doing something is better than just allowing the courts to have their way with you. At least make an effort to protect your assets. You never know when you may be faced with a situation where your assets are at risk.
9. Not getting your foundation estate plan in place as part of your asset protection plan.
10. Trying to do it yourself. You only have one shot at protecting your assets correctly. Be sure to use an attorney that specializes in asset protection.
A Special-Needs Trust is a trust established for the benefit of a disabled beneficiary who is entitled to receive governmental assistance. The intent of the trust is to provide for the beneficiary above-and-beyond the supplemental assistance without accidentally turning that Federal aid “faucet” off. The correct drafting of this type of trust is very important since errors can result in the loss of government assistance or trust income.
The payment of income and principal should be entirely left to the discretion of the trustee and the beneficiary should never be given the option to act as their own trustee. In addition, cash payments should never be made directly to the beneficiary. Instead, the trust should simply pay for the items that are needed by the beneficiary. This is important because any money the beneficiary receives may reduce their Supplemental Security Income or may even cause a total loss of Medicaid benefits.
The beneficiary, or their guardian, will ask the trustee to make a distribution. The trustee will consider whether or not he or she is permitted to make the distribution and whether making the distribution is in the best interest of the beneficiary. If the trustee agrees to the distribution, the trustee will pay for the good or service directly from the trust account to the vendor.
Protective wording should be inserted in the trust to clarify that the trustee is to expend income and principal only after Federal, state, and local public assistance is received and exhausted. The income and principal should only be used for the benefit of the beneficiary. A spendthrift clause should also be included in the trust to avoid the possibility of the government’s attaching the trust property to be reimbursed for its public assistance payments.
Choosing an attorney to draft a Special-Needs Trust is not always an easy task. Drafting a Special-Needs Trust is highly specialized and you want someone who is experienced in this area. Choose someone whom you can trust and you feel comfortable with because the Special-Needs Trust will last for the lifetime of the beneficiary and your attorney will be a crucial part of your financial team.
Michael D. Wild is a Florida attorney specializing in the areas of estate planning and asset protection. For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at email@example.com to schedule your free consultation. Protecting what you value most.