What Is Asset Protection Planning?

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March 1, 2023 •  The Estate & Elder Law Center of Southside Virginia, PLLC
Asset protection planning is the process of building barriers around your assets, whether those assets are personal or business, to keep them safe from litigation, creditor claims, seizure and burdensome taxes.
Robert W. Haley, managing lawyer
Robert W. Haley
Certified Elder Law Attorney® Robert W. Haley brings over 27 years of legal expertise and knowledge to his firm, which concentrates solely on the areas of elder law, estate planning (Last Will & Testaments, Durable Powers of Attorney, Health Care Powers of Attorney, Living Wills, Trusts, etc.,.) Asset Protection/Medicaid Planning and fiduciary services. For many years, Robert practiced in real estate law, and in general practice, but decided to narrow his focus to elder law and estate planning when he realized the tremendous need for proper planning to be filled in Southside Virginia.

You may have heard someone talk in passing about doing Asset Protection to protect their assets for the future. So, what exactly is Asset Protection Planning? There are a lot of misconceptions about this topic! Yahoo’s recent article entitled “How to Protect Your Money, Even If You're Not Rich” says that contrary to what many people believe, asset protection planning isn’t just for the wealthy. The estates of anyone, in any income group, can be sued or suffer from hefty taxation. The following strategies can mitigate the effect of creditor claims and other issues on your wealth.

For example: If you want and need to protect your assets, you should be proactive! However, if you have significant debt and few assets and you are subject to a lawsuit, it may be better to file for bankruptcy than to create an asset protection plan. That's because it's only worth it if you have significant assets, although some events cannot be protected against. These include tax liens, mechanics liens, alimony judgments and child support claims.

A plan done properly benefits these people the most:

  • Anyone with a significant amount of assets.
  • Anyone with a significant, recurring amount of credit card debt.
  • Homeowners underwater on their mortgage (your mortgage balance is greater than the value of your home).
  • Anyone whose profession carries with it a high probability of liability, such as doctors and attorneys.

Some assets aren’t subject to creditors, such as retirement accounts under the protection of the Employee Retirement Income Security Act of 1974 (ERISA).

You may also legally preserve at least a portion of your home equity. Homes may be put in another individual's name, but make no mistake,  It is crucial that you meet with an attorney experienced and certified in elder law to discuss your specific situation and make sure this is done the right way, as to avoid any unnecessary complications or surprises later on!

The goal of an asset protection plan is to set a level of legal separation between you and your assets. This allows you to legally shelter your assets from creditors without doing anything illegal. This is no different than visiting a tax professional during tax time to make sure you receive all deductions allowed under the IRS code that you are entitled to under the law!

When you need answers to questions like "What Is Asset Protection Planning?" and are interested in finding out what options are right for you, just know that we are here to help! If you or a loved one are concerned about issues with situations like this, and in estate planning and elder law concerns including Asset Protection/Medicaid Planning and questions regarding long-term care and the nursing home, reach out to us! With the right planning and guidance done ahead of time, there is always a chance to protect what is important to you and your family! Book a call with us on our website: www.VAElderLaw.com to get started and learn more. We have offices in BassettDanville and Lynchburg to serve you.

Reference: Yahoo! (Nov. 6, 2022) “How to Protect Your Money, Even If You're Not Rich”

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