One of the basic components of an estate plan is wealth preservation. During your lifetime, you work to acquire assets and properties that you may need to pass on to your loved ones. To be able to leave the assets for future generations, you should properly safeguard them while you are still alive. The easiest way to protect your family is to put all agreements in writing. Check out these 4 ways to legally protect your property for your family’s sake.
The strategy of retitling your property can protect it from being seized if you become the main subject of a legal dispute. It may not be possible to retitle all the assets you have. Therefore, choose one property as a home to safeguard the interests of your family. Whether you are still alive or dead, you need to protect the house for your family. You can achieve this by taking out your name from the public record.
For married people, you can use the strategy of titling your property as tenants-by-entirety with your spouse. Your spouse will immediately become the sole owner of the property in the event of your passing or vice-versa. Furthermore, properties owned by tenants-by-entirety are exempt from creditors if a judgment is made against one spouse for their liabilities or debt. Assets owned in certain qualified retirement plans can also be protected.
Asset Protection Trusts
Asset protection trusts are strong tools that can also be utilized to protect wealth against creditors. An asset protection trust can be irrevocable, and this is the strongest mechanism to protect your property when you pass on. There are many advantages of putting property in a trust since this is a legal document that spells out what happens to your assets when you die. In terms of asset distribution, the courts will not be involved. When your property is protected by an irrevocable trust, no one can contest it.
The distributions of properties can take place earlier instead of several months after, which is often the case when you leave behind a will. With trust, there will be no probate involved and attorney fees, which makes the process easier for your family. You should pay an attorney up front to draft your trust document. A trust can be kept private, and it is appropriate for bigger assets like homes, whereas a will is ideal for smaller possessions like furniture.
In other states, there is an exemption that is designed to protect a certain amount of the home’s value from bankruptcy or creditors. You must first check if this provision is available in your state before you choose it. When the creditor comes to force you to sell your home to recover their money, they will only get the mortgage, residue of selling costs, and the amount of your homestead exemption. In some states, the homeowners enjoy full benefits of the exemption and creditors rarely touch the debtor’s properties.
When you fall on difficult times, your family will have a home to stay in while you make a plan to settle your debt. A certain amount of equity of your home will be protected, but the amounts vary from state to state. You also need to research the conditions required to qualify for homestead exemption. The facility is usually based on the laws in different jurisdictions.
In other states, property owners are allowed to sign a Transfer-on-Death-deed, which is used to transfer ownership of assets to heirs when the owner dies. This deed can also be utilized by the survivors to avoid probate on a specific asset covered. However, you can change your decision before you die if you are the owner. The Transfer-on-Death applies to any property located in a state where it is allowed. The process of passing your home to the kids can be complicated since the laws vary by state. You need to explore the legal options available and choose the best method that suits your needs. Without sound legal documents, property distribution can be challenging.
For various reasons that you may not be able to control, wealth preservation is critical to safeguard the interests of your family. When you plan your estate to protect your family, it is essential to implement the strategy you want or a combination of strategies before any legal action is filed against you. Since there are many options available, it is vital to discuss different solutions with your estate planning attorney or wealth advisor to make an informed decision.