FAQS STRATEGIES FOR ASSET PROTECTION
There are several strategies we can use for asset protection. Below are some of the issues we frequently address with our clients.
Since the property is in an irrevocable trust, it is no longer yours. Therefore, a creditor cannot take it from you. In the trust document, you instruct the trustee to use the trust to provide for you and your family.
You can give members of your family limited partnership interests without any control. If structured properly, it will be more difficult for these assets to be seized by creditor actions and it keeps assets safer from predators.
If you have a business that you operate in your own name or as an assumed unincorporated name, your personal assets are at risk if the business gets in trouble. If you incorporate, your business liability is limited to your business assets. Your personal assets such as your home are shielded. Note: depending on the laws that apply, creditor action against a C or S-Corp may result in the creditor getting access to corporate stock and then voting to liquidate the Corporation entirely to gain access to assets. An LLC may protect your business from this if creditors can only obtain a “charging order” and carry no right to vote. This may limit the reach of the lawsuit. You don't have to give up control of your assets when using an LLC.
If spouses hold property as the separate property of one spouse, as opposed to community property, creditors of the other spouse have more limited rights against the separate property spouse.
If you have a son or daughter who spends money wildly, gets sued often, or makes a poor choice for a spouse, you can place his or her inheritance in a trust with properly drafted provisions. The son or daughter's creditors cannot touch the money. Furthermore, the son or daughter cannot get to the assets or income of the trust until they are distributed at the discretion of a trustee.
Most states have statutory protections that limit a creditor’s rights to seize certain types of property, even though held in the name of the debtor. The most common exemptions are:
Homestead exemption: Generally, a dollar amount of a personal residence of the debtor is protected from the claims of creditors, some states even protect the entire residence, without regard to value.
Wage exemptions: States generally allow only a limited amount of compensation to be protected from garnishment by a creditor.
Annuity exemptions: Some states exempt annuity payments from creditor claims.
Qualified plans: There is federal protection of a qualified plan’s assets from claims by creditors of the employee beneficiary. However, this protection does not extend to federal tax claims.
Individual retirement accounts: Most states provide a degree, or complete, protection from creditor claims for the debtor’s IRA accounts, although, there is no protection from federal tax claims.
Life insurance cash value: Some jurisdictions provide considerable protection for the cash value of life insurance owned by the debtor.
If a lawsuit is pending, transferring property to protect it from a successful lawsuit will not be effective. There is a concept in the law termed a “fraudulent conveyance.” Essentially, a fraudulent conveyance is any transfer which:
Is intended to interfere with the ability of a particular creditor to collect on any successful lawsuit, or
Makes the person making the transfer insolvent after the transfer.
If either of these conditions are present, a court may require that the recipient of the transferred property return the property so that the creditor has access to satisfy the creditor’s judgment.
HOW CAN WE HELP?
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We believe each family is unique and that your family dynamics and personal circumstances should be carefully considered when designing your plan.
Our goal is to understand your concerns, your goals, and your family’s needs. Our caring and compassionate approach to these important matters will allow you to comfortably explore your options and make informed decisions.
To provide quality and personalized estate plans which provide families the levels of protection which meet their individual needs. We consistently strive to maintain a highest levels of customer service by remaining attentive to your needs.
We are committed to putting our clients first. Our law firm realizes that clients are entrusting us with matters that are most important to them.
Let us help your family. Please feel free to contact us for a free consultation.
Willi Law Firm, P.C.
5920 W. William Cannon Dr.
Bldg. 6, Ste. 100
Austin, TX 78749
Main: (512) 288-3200
Facsimile: (512) 277-6010
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The attorneys at Willi Law Firm are your Austin, Texas resource for estate planning, wills, living trusts, firearms trusts, powers of attorney, living wills, probate and estate administration, trust administration, special needs trusts, disability planning, Medicaid applications and qualification, long-term care planning, elder law, Medicaid crisis planning, charitable planning, estate tax planning, business and corporate planning, business succession and sales, and asset protection.
Willi Law Firm proudly serves Central Texas individuals and families in the following counties: Bastrop, Blanco, Burnet, Caldwell, Hays, Lampasas, Lee, Travis, and Williamson, and in the following communities: Austin, Bastrop, Brushy Creek, Buda, Burnet, Cedar Park, Driftwood, Dripping Springs, Elgin, Georgetown, Hutto, Jollyville, Kyle, Lakeway, Lago Vista, Lampasas, Leander, Lockhart, Luling, Manchaca, Manor, Marble Falls, Oak Hill, Pfugerville, Rollingwood, Round Rock, San Marcos, Shady Hollow, Spicewood, Taylor, Wells Branch, Westlake, Windemere, and Wimberley.