A major goal of estate planning is to protect the assets of a creator so they can be passed effectively to beneficiaries.
Creditor claims are one of the potential problems that can chip away from the value of an estate without proper estate planning. Thankfully, there are several options available that may be beneficial for individuals who want to pass down as much as possible to their loved ones.
Utilizing irrevocable trusts for asset protection
Irrevocable trusts are an effective option for many people who want to protect assets from lawsuits and creditor claims. By placing assets in an irrevocable trust, the creator relinquishes control, which means creditors typically can’t reach these assets, as they’re no longer considered part of the individual’s personal estate.
Establishing family limited partnerships (FLPs)
A family limited partnership (FLP) can also be a powerful tool in protecting ultra-high estates. In an FLP, control of the partnership remains with senior family members, even though there are other members in the partnership. This structure can limit a creditor’s ability to access assets because they’re often restricted from taking ownership of partnership interests, especially if certain provisions are included in any agreements governing assets at issue.
Domestic and offshore asset protection trusts
Another layer of protection can be achieved through domestic or offshore asset protection trusts. These trusts are established in jurisdictions where there are laws that offer strong asset protection. Offshore trusts, in particular, are governed by the rules of foreign countries that are beyond the reach of U.S. court orders, offering an additional level of security, in many cases.
Ultra-high value estates require very careful planning and thoughtful strategies. Otherwise, assets may not be available for beneficiaries when an estate creator passes away. Individuals who are going through the estate planning process should learn about their options and move forward with the strongest protection possible. Working with a legal representative who can assist with getting a plan in order may be beneficial, given all that is at stake.