After a lifetime of hard work, sacrifices and possibly careful investment, passing along one’s wealth to specific recipients can create a meaningful legacy for an individual. However, not all of the resources in someone’s name automatically transfer to their loved ones or named beneficiaries when they die. In fact, beneficiaries often learn after someone dies that their right to inherit property from an estate is secondary to the rights of creditors ranging from tax authorities and banks to the Medicaid estate recovery program.
Asset preservation through asset protection planning can be a very important step for those who want as much of their property as possible to pass to their chosen beneficiaries when they die.
Asset preservation often requires a trust
Those who want to protect specific property so that their loved ones can inherit it often choose to transfer those resources to a trust. Provided that they do so several years before applying for Medicaid benefits or before facing lawsuits from creditors, they can often protect at least some of their resources from probate claims after their death and creditor lawsuits while they are still alive.
By changing the ownership of one’s most valuable resources to a trust, it is possible to protect those assets from creditor claims in civil court and then also in probate court after someone dies. The assets are even protected from property division in divorces in many cases. Ideally, someone will move to protect their most valuable assets at least five years before they need Medicaid and prior to any creditors initiating legal action in the civil courts.
Different situations made demand different solutions
There is no one perfect remedy for preserving assets for the benefit of someone’s family members and named beneficiaries. An individual’s family circumstances, their unique personal holdings and their current legal situation may all influence the most effective approach to preserving their assets and maximizing their legacy.
Learning more about asset protection planning is an important step for those who hope to maximize the property that they’ll pass to specific beneficiaries when they die.