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The Fifth Pillar of Asset Protection

The fifth pillar of asset protection.

The Fifth Pillar of Asset Protection is that asset protection is coordinated with your other goals. For example, estate planning is an important part of any financial plan. By considering and setting your goals, you can ensure that your assets are secure and well-managed after you’re gone. With clear objectives and strategies, you can make sure that your estate planning efforts are both efficient and effective. But, many asset protection strategies completely ignore goals such as estate planning. (We discuss other possible goals in this article. So keep reading.)

Establish your legal wishes regarding property and assets you want to pass on to your heirs.

It’s important to create legally binding documents that outline your wishes for how you want your estate left to your heirs. The Fifth Pillar of Asset Protection means that your other goals like this should be addressed. By creating a will, trust, and other related legal documents, you can specify who is to inherit which assets. These documents also dictate when your beneficiaries are to access certain assets or property. You can also provide instructions on how to manage your property after you’re gone, such as stipulating that certain assets are only available for use in a specific context or for a limited period of time.

Allow for the efficient transfer of assets after death without creating financial hardship for the heir(s).

Estate planning is a way for people to ensure their assets get distributed appropriately, without creating undue financial hardship in the process. Many asset protection plans completely ignore this goal. The problem is that many asset protection attorneys do not do estate planning. You may want to designate beneficiaries who will receive certain assets when you pass away. You may also want to have provisions that allow your heirs to access those assets in an efficient and cost-effective manner after you are gone. If your asset protection plan does not work together with your estate plan, you may be setting your loved ones up for conflict. You may also be creating a situation where your loved ones need to pay unnecessary taxes and other fees. The Fifth Pillar of Asset Protection means that your asset protection plan should also help you avoid creating this mess for your loved ones.

Reduce estate taxes and protect assets from claims against your estate, or from creditors of your beneficiaries.

This might surprise you. Some so-called “asset protection plans” fail to protect your assets from your creditors after you have died. An example is the Bridge Trust. If you die owing debts or having creditors, your heirs will have to make a difficult choice. They can either pay the steep fees to have the Cook Islands trust company take over as trustee. (In that case, your assets are now managed outside the U.S. As a result, your heirs don’t have ready access to the money.) Or the assets in the Bridge Trust can transfer to your estate or to your revocable trust. And in that case, your creditors get paid out of whatever had been in the Bridge Trust.

Also some asset protection plans (prepared by other companies) may not protect your assets from the creditors of your beneficiaries. And they often do not address estate tax issues.

Estate planning helps ensure that your assets are given to the designated beneficiaries upon your passing;. It can also help protect those assets from becoming vulnerable to taxes and other claims. Formation of a trust can allow different tiers of protection for certain assets. Your trust can also carefully designate how various types of assets are distributed. This ensures that your loved ones avoid court proceedings and probate processes. This means that your heirs’ inheritances will not be eaten up by taxes or creditors but will instead serve their intended purpose. The Fifth Pillar of Asset Protection means that your legal planning should address your estate planning goals.

Continue business operations in case of death, including maintaining control of the business as laid out in a will or trust document.

If you own a business, estate planning is extremely important for ensuring that it may continue to run even if you were to pass. A will or trust document allows you to specify directions and rules for whoever is managing the business after you pass away. A trust can also provide for managing your business if you get in a car accident or get dementia. This helps guarantee that any heirs would not be able to make changes like selling off assets unless explicitly allowed in the document. This includes how assets should be divided along with appointing those capable of running the company after your passing.

Make sure that someone can make health-care decisions for you if you are no longer able to.

Estate planning also involves preparing for health-care decisions that need to be made in the event of a medical emergency. For example, you could end up with a court-appointed guardian making health care decisions if you didn’t plan ahead. The way to avoid a guardianship court proceeding is to sign a health care power of attorney. Many asset protection companies don’t think about things like. But what good is having your asset protected from creditors, if you still end up in the court system? (It doesn’t make sense. That’s why the Fifth Pillar of Asset Protection means that your legal planning should also address other goals such as having someone make health care decisions for you if you can no longer do that yourself.)

Your planning should also include making a health care power of attorney and a living will. The health care power of attorney appoints an agent to make medical decisions if  can’t. For example, you might be laid up in the hospital. In that case, the person you name in your health care power of attorney can make medical decisions for you. The living will is a “pull the plug” document that tells the hospital to allow you to die naturally if you are in a prolonged vegetative state. By preparing these documents, you can make sure that your wishes get honored even if you’re unable to make decisions yourself.

The Fifth Pillar of Asset Protection means you deserve a holistic solution.

You don’t just want to protect your assets during your lifetime, only to have them lost to your creditors after you die. Or to have your net worth lost by your children’s foolish financial decisions. You may have other goals as well, such as the continuation of a family business. If your asset protection attorney is not asking you about all of your goals, they are probably not addressing them.

If you want an asset protection plan that also takes into consideration your estate planning and other goals, give us a call.

We understand that you want a complete solution. You don’t just want a solution that protects your assets but ignores your other goals. If you want complete protection, give us a call at 602-443-4888.


Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.