The day after Thanksgiving is known as Black Friday, and a lot of people love to shop on that quasi-holiday, as stores across the country have great sales. We’ve all seen the footage from Black Friday—the fights, stampedes, and general bad behavior. In the face of this greed, you might wonder if loving to shop and obtain assets is wrong. 

It’s not, though stampeding someone to get a brand-new coffeemaker on Black Friday certainly is. There’s nothing wrong with working hard to purchase something you really want. And, when you get the item you want, you should have the tools to protect it. Asset protection is a series of techniques that legally insulates assets from creditors and civil judgments. 

Unlike Black Friday stampeders, asset protection follows the law to a T. In this article, we’ll talk about different asset protection tools and how they can benefit you. 

Who Is Asset Protection For? 

Certain types of people, such as business owners and professionals, are at a higher risk of incurring a lawsuit than others. For example, dentists face a higher number of lawsuits than everyone else, and 39% of these suits are successful (Bureau of Justice). Of those awards, 21% are over $250,000 (the average is $53,000, says the BoJ). 

Right or wrong, America is a litigious society. That is why the field of asset protection has popped up as a semi-defense to these creditors seeking judgments. Here are some tools to note when it comes to protecting your assets. 

Land Trust

In Florida, a land trust separates equitable ownership and legal title of a parcel of land. The person who establishes the trust is the beneficiary, and they are the ones who contribute or borrow money to buy the property (i.e. the economic owner). Land trusts provide you with privacy of ownership of this real property, and they are a great asset protection shield. 

Business Structures 

Some business structures, such as a corporation or LLC, provide asset protection from creditors. An LLC in particular is the most popular tool for holding real estate. 

Corporation

Corporations can help protect assets, as they work as a limited liability tool for officers, directors, and shareholders. This business structure can protect your assets from those coming to collect corporate debts or other claims. It can even serve, sometimes, in the right conditions, as a barrier to a breach of contract judgment (something many business owners experience).

LLC

An LLC is not only a fantastic way to hold real estate; it also is a great protection tool for stock market investment portfolios. A Limited Liability Company has the same asset protection benefits that a limited partnership does. A creditor cannot take your interest in an LLC, and a judgment usually cannot take your personal assets in the event of a business dispute. 

Equity Stripping 

Equity stripping reduces the amount of equity you hold in a property, making it unattractive to creditors. Unfortunately, this tactic, which became widespread in the 2000s, has also been used by predatory lenders who want to take advantage of homeowners who are facing foreclosure. Though equity stripping can be successful, it does not always work. Tax liens, for example, will always trump whatever lien you levy against your property, wrecking chances you have at protecting your assets.

Offshore Trust 

This conventional trust is formed under the laws of an overseas (offshore) jurisdiction. This estate planning tool, essentially, grants an individual some jurisdiction outside of America. The individual’s assets are transferred overseas, where they are generally placed under the supervision of estate plan/financial managers. An offshore trust is asset-protective, but it is expensive to set up, generally costing between $12,000 and $25,000. 

As you can see, there are multiple ways to protect your home, some of which are not included on this list. Talk to an estate planning attorney today if you feel that asset protection fits your financial situation.

Well, we can tell you right now what we’re thankful for: being experts at drafting estate plans. Thanksgiving is around the corner, and, just from the name, we all know that this holiday is a season to be grateful for what you have. This year, Thanksgiving (AKA Turkey Day) falls on Thursday, November 24th.

This annual national holiday celebrates the “harvest” and blessings of the past year. Most Americans consider their holiday to be based on a harvest feast in 1621 that was shared between the Wampanoag Native Americans and the English colonists (Pilgrims). Thanksgiving also takes place in Canada, Saint Lucia, Liberia, and Grenada, and there are similar festivals in Japan and Germany, too.

If you think of your assets as a Thanksgiving dinner, what’s the “turkey”? Chances are, your home is your “main course,” as, if you own your home, it is probably the most expensive, largest asset you have. In this article, we’ll talk about different ways you can protect your abode through estate planning. 

Home Protection Strategies

You’ll want to contact an estate planning attorney to discuss these home protection strategies. Deciding what you want to do with your home is a financial, emotional, and logistical decision that you’ll want to talk to your family about before going ahead. 

Some of the main options for home transfer include: 

• Co-Ownership
• A Will
• Revocable Trust
• Qualified Personal Residence Trust 
• Through A Sale 

Below, we’ll go through each tool individually. 

Co-Ownership

This is a pretty simple method. A lot of people put their kids as co-owners on their house deed. If the deed lists another person as a joint tenant, that joint tenant can become a co-owner when the deed is changed. When the original owner dies, the child can automatically take ownership of the house. Note: you’ll have to think about taxation when considering this approach.

A Will

Of course, you can always use a will to pass your home to someone. The owner can put the home as an asset in the will, though you will still have to pass through probate. Probate can be time-consuming and expensive, and there are privacy concerns, as wills are, generally, public documents. 

Revocable Trust

This legal structure allows the trustee or grantor to retain control over the assets during their lifetime. They can specify when and how their assets are passed to beneficiaries. The house can be placed into this trust, and, upon death of the creator, the assets will be quickly, private distributed with no need to go through probate. The homeowner will have control or use of their home throughout their lifetime, and efficient distribution will occur upon their death. 

Qualified Personal Residence Trust 

A QPRT, as it’s known, is a way to move a primary/vacation residence out of your estate using a reduced gift tax cost. The home is transferred to the trust right away, though the owner retains the right to live there during the QPRT term. They are still, during this term, responsible for all aspects of ownership. The QPRT will have an end date, upon which the home will transfer to a beneficiary. 

Note: a transfer on death deed is permitted in some states, but Florida does not permit this. In Florida, there has been no adoption of the Uniform Real Property Transfer on Death Act. 

Through A Sale

Of course, you can always sell the home to transfer it. If you don’t think your kids will want your home, consider selling it and, later in life, renting a place to live. Maintenance, lifestyle, and health are all factors in whether this will work for you, and you’ll also want to consider the tax impacts of your decision. 

Your home is likely your largest, most expensive asset, and you will want to make sure that you distribute or dispose of it in the way that works for you. If need be, contact an estate planning attorney to talk about transferring your home, and have a safe, happy Thanksgiving! 

This Friday, November 11th, we’ll celebrate a holiday that calls on us to remember our veterans and what they have sacrificed to keep us safe. Veterans’ Day has been observed for sixty-eight years, and it is a federal holiday, which means a lot of people have the day off to reflect. 

While you’re reflecting, consider focusing on what truly matters in life: your family. Estate planning can be an excellent way to protect your family after you pass on. Estate planning, in a nutshell, is the process of arranging and anticipating, during your life, for the management and disposal of your estate when you pass away. It can be a gloomy topic, but we choose to look at estate planning as a celebration of life and a way for your legacy to live on. 

Protective Estate Planning 

The thing about estate planning is that it doesn’t work if you drag your feet. If you’ve been thinking about getting an estate plan but haven’t done it yet, consider this your wakeup call to meet with an attorney. There are five main components to an estate plan, though there are a lot more tools you can use besides these main five. 

Here are the five main components of a solid estate plan: 

• Wills And Trusts. Though they’re in the same section in this article, wills and trusts are two different things. A living trust is a legal document that is established during your lifetime. It transfers assets to a trustee to be distributed upon death to your beneficiary. A trust bypasses probate court, which makes it an attractive option. Wills, on the other hand, are last expressions of your final wishes for your assets. They go into effect after you die, and they must pass through probate court.
• Medical Or Healthcare Power of Attorney. This power of attorney is a trusted individual who you appoint to make your financial or healthcare decisions if you are too incapacitated to do so. This PoA acts on your behalf and having such a designation can be very important for your wellbeing. 
• Durable Power of Attorney. A PoA is a written document that designates another person as your agent to make decisions on your behalf. The Durable Power of Attorney covers a wide range of business and legal matters. 
• Living Wills/Advance Directives. Living wills/advance directives are legal documents that specify the medical treatments you would or wouldn’t want to be used to remain alive in the event of a medical emergency. It can also detail your decisions on pain management and organ donation. As you can imagine, this document is very personal to the creator. 
• Beneficiary Designations. A beneficiary designation lets you transfer assets to individuals no matter the terms of your will. These designations are usually used when a retirement account, life insurance policy, or financial account are established. Your beneficiary gets the proceeds of the account when you die.

Asset Protection vs. Estate Planning 

Estate planning is an excellent way to manage your affairs and ensure things are in order when you die. Estate planning is different from, though no less important than, asset protection. 

Asset protection consists of a body of legal techniques, which abide by the law, that protect the assets of individuals and entities from judgments and creditor claims. Asset protection planning insulates assets from creditor claims without committing tax evasion or perjury. Insurance, transferring assets, retitling assets, creating a trust, and more are all legal, useful ways to insulate your property and money from civil judgments. 

Both estate planning and asset protection are necessary for those who want to ensure that their assets are distributed in the best way possible. Contact a WFP estate planning attorney today to learn more.