February is the month of heart shaped chocolates and cards that express how your heart belongs/beats/flutters/etc. for your Valentine. Thus, it’s not necessarily an ideal time to be confronted with the grave reminder of how fleeting life can be, and the importance of planning for the unknown. However, for many, such planning is for the benefit of family and loved ones. Although we have little control over our fate, you can ensure that your loved ones are protected in the event of your own sickness or death. The following estate planning documents can be customized to ensure that your loved one’s are protected, not only in health, but also in sickness and death.

• Last Will & Testament – used to distribute property to beneficiaries (or a trust), specify last wishes, and name guardians for minor children. You can use a pour over will that funnels all of your property into the trust, to ensure greater asset protection for your loved ones.
• Living Trust – gain control, asset protection, & preclusion of unnecessary taxes; designate a trustworthy (no pun) Trustee. You can further provide that your assets continue in trust for the benefit of your loved ones, providing them greater protection from the claims of others.
• Durable Power of Attorney – gain control by designating someone to legally act on your behalf. There are many types of POA’s (“power of attorney”), but a “Durable” power of attorney means the power will be in effect even when you become incapacitated. Therefore, ensuring that any important business related decisions can be made in the event that you cannot make them yourself.
• Living Will & Designation of Healthcare Surrogate – make important healthcare decisions for yourself in advance. Determine who can access your health records and make medical decisions on your behalf.

Once upon a time (cue happily ever after music), there was a Prince who wanted to protect the Princess from his enemies, so he shipped her off to a far away land. …if you just heard the record scratch to a halt, it’s because this is not your story-book-happy-ending. The real storybook version ends with Prince & Princess cozying up in the castle, safe from all the evil step-mother’s, witches, and dragons. Whether in the storybooks, or good ol’ reality, the happy ending remains the same: you want to protect what is yours, without losing the benefits associated with it. The following plans are among the many strategies that can provide protection from the fire-huffing-dragons, while effectively maintaining control.

LLC Based Asset Protection Plan:

An LLC allows you to use and control an asset, yet you will not own the asset in your name. Rather, it will be owned by the LLC or LLP. Therefore, by separating your assets into several LLC’s, you are safeguarding them from being pulled into a lawsuit brought against you, as they are owned by the LLC.

An LLC is a “Limited Liability Company.” It provides the desirable liability features of a corporation, without all of the extra hassle (paperwork, etc). Lets say you have a boat. So you give it a clever and punning name, and put it in an LLC. A judgment against you is not valid against the LLC and the asset it holds (the boat). Furthermore, lets say you have an investment property (a high risk lawsuit property), and a tenant injures themselves on the property, and commences a lawsuit. They can only sue the LLC. Your home and other assets (bank account, etc.) may not be touched, because you do not own the property, thus you are not personally liable. It’s like being a stockholder in a corporation.

Due to the fact that there are several requirements to properly forming an LLC, you may want to seek an attorney (that has a thorough understanding of such asset protection) to assist you in ensuring that the LLC is valid; otherwise, your safeguarding efforts will be futile. Also, keep in mind; the timing of the asset transfer cannot be done to actively avoid a present creditor, as it may be considered a “fraudulent conveyance.” Therefore, it is important to partake in these asset protection strategies prior to any legal or financial problems. The early bird gets the worm – Don’t let it be the Vulture!

Trust Based Asset Protection Plan:

While a living trust is a great tool for estate planning, especially for those who want to avoid probate; it is not as effective in preventing claims of others. An irrevocable trust, on the other hand, allows you to give up “control” for purposes of ownership, in the same way you do with the above LLC. Unlike the living trust, you do not want to name yourself as trustee; rather, you should consider an independent trustee (bank, etc.). You could allow your spouse to be the trustee, but must be certain that they are limited to “ascertainable standards” (where the distributions can only be made for health, education, maintenance, and support.” Furthermore, you want to include a spendthrift clause, which allows distributions to be discretionary, rather than mandatory.

By utilizing estate-planning techniques, you can protect yourself and your family from unnecessary hassles, while safeguarding your assets. With the help of an estate-planning attorney, there are a variety of tools that can be customized to your goals, and implemented to ensure a “happily-ever-after” in your storybook.