Why You Need Both Estate Planning and Asset Protection

Tue Feb 28, 2023 | Asset Protection |

Asset protection is one of the most overlooked aspects of financial planning. If you have significant assets that you worry about protecting, an experienced asset protection attorney can help you understand your options. 

Estate Planning vs. Asset Protection

The phrases estate planning and asset protection are sometimes used interchangeably. In other cases, estate planning is described to include asset protection. It is easy to get confused and assume that their assets are protected since they have an estate plan. 

To understand the importance of asset planning, it is helpful to understand how these two services differ.

  • Estate planning generally consists of creating a plan for the preservation and distribution of your assets after you die. This could involve drafting a will, creating a trust, or some combination of both. While it may have implications as to how your assets are managed during your lifetime (such as with a trust), the ultimate goal is to preserve the value of those assets so that they can be of benefit to your family or others after you die. 
  • Asset protection focuses on protecting your assets against loss or depletion of value due to life’s uncertainties during your lifetime. A comprehensive asset protection plan will protect your assets from losses due to creditors’ claims, bankruptcy, divorce, or business losses. 

Estate Planning and Asset Protection Work Together  

One of the reasons these two concepts are often confused is that they tend to work in tandem. In other words, a comprehensive estate plan should include an asset protection plan. The best estate planning in the world is worthless if a significant portion of your assets is lost due to a business failure. Meanwhile, the value of your asset protection plan is increased when it is incorporated into your estate plan. Together, your estate plan and your asset protection plan ensure that you and your family can enjoy the wealth you have built for years to come. 

The Time is Now to Consider Asset Protection

Almost up until the moment you pass away, it is never too late to create an estate plan to ensure that your loved ones are taken care of. 

Unfortunately, this is not the case with asset protection. 

If you wait until your assets are threatened, any attempt to shield them from attachment may be challenged. For example, bankruptcy law prohibits anything that may be considered a “preferential transfer” – a transfer of assets that is deemed to have been made in an attempt to protect them from creditors. It allows the court to reclaim any assets that have been transferred within 90 days of the date you filed for bankruptcy. Generally speaking, any actions that could be construed as an attempt to shield assets will be considered red flags in a variety of contexts. 

The best course of action is to take steps to protect your wealth before you run into trouble. An experienced asset protection lawyer can walk you through your options and work with you to develop a plan that meets your needs. 

Contact Ellis Law Group to Discuss Your Asset Protection Needs

At Ellis Law Group, we have built our practice to serve all of our client’s financial needs, both now and in the future. Whether you need to protect your assets or want to discuss your estate plan, we can help. Contact us today by calling 561-910-7500 to schedule an appointment.