Asset protection trusts (APTs) can be valuable tools in keeping your most essential assets safe from creditors. An asset protection attorney Los Angeles can help you create a trust that protects you but is flexible enough to meet your needs.

Not everyone needs asset protection as part of their financial planning, but some people are perfect candidates for this kind of trust. How do you know whether or not an asset protection trust is right for you?

In this article, we’ll get into the pros and cons of asset protection trust and how they can benefit you.

How Does an Asset Protection Trust Work?

This type of trust is used to protect your assets from being collected by a creditor. The trust will hold certain assets and ensure that you do not have legal control over them. When they are outside your control, creditors will not be able to get access to them.

Surrendering control and legal ownership of certain assets means that litigious people or creditors cannot get access to those assets through you. Asset protection trusts are complex and require work from an expert estate planning attorney Los Angeles in order to serve their purpose.

These trusts are irrevocable, which means that you cannot change the terms or revoke them yourself. Instead, the trustee must be involved in any change made to the trust. Your attorney can help you draft a trust with enough flexibility for your specific needs.

Benefits of Incorporating an Asset Protection Trust into an Estate Plan

There are plenty of benefits associated with creating an asset protection trust. Not everyone is a good candidate for this type of trust, but it can be an essential form of financial planning for some.

Crucially, this type of trust still allows you to benefit from the use of assets included in the trust. You can still use an asset, such as a home while keeping it safely ensconced within a trust and out of reach of creditors.

You will still need to establish a trustee who has formal control over your trust and everything contained in it. However, you can create a trust in which you determine what happens to your assets, including investing and selling them.

An asset protection trust is the best way to protect your assets from anyone seeking them. That includes creditors and people who may sue you. It can be a useful deterrent of legal action against you.

For some people, such as those who own a business or have a career that exposes them to public scrutiny, planning for this eventuality is a good idea. It provides some extra security and peace of mind that bad actors will not be able to sue you and have financial gain from doing so.

Overall, a trust can help you keep your assets safe and make them much harder to access for creditors and litigious people.

Downsides of an Asset Protection Trust

Creating an asset protection trust does have some downsides. For some people, the cons of using a trust for asset protection may outweigh the benefits.

To properly protect your assets, you’ll need to put them into an irrevocable trust. This can’t be altered after it’s signed, and the assets contained will be outside your legal control.

Irrevocable trusts are very difficult to change. Your attorney can help you create a trust tailored to your specific needs, with a bit more flexibility built-in. However, the trust must hold your assets and remove them from your control in order for it to truly protect them.

An asset protection trust can be expensive to set up. They are complicated and require a lot of planning. Foreign APTs in particular cost a lot of money, so be sure that the fees are worth the security.

Asset protection trusts are not available in every state—currently, they are only recognized in 17, not including California. To create one, you may need to set it up in another state or country. A good attorney can help you do so safely and legally.

Not everyone needs an asset protection trust. If you are dealing with the threat of litigation, or have considerable debt, you may want to consider moving some key assets to one of these trusts to have some security.

Types of Asset Protection Trusts

There are several types of asset protection trusts catered to different needs.

1. Irrevocable Beneficiary Inheritance Trusts

These are designed to hold assets on your beneficiaries’ behalf so that they don’t lose them due to their debt, payments to an ex-spouse, or other situations.

Instead, they can wait to withdraw their inheritance at a more convenient time.

2. Special Needs Asset Protection Trusts

These are designed to hold assets for a disabled person who relies upon financial assistance from government programs. In order to qualify for monthly disability payments, for example, recipients must have less than $2,000 of assets in their name.

A trust can pay out monthly disbursements without compromising the disabled person’s eligibility for disability or Medi-Cal. 

3. Medi-Cal Planning Trusts

This has a similar function. Instead of using all your assets to pay for medical care, you can keep them protected in a trust.

Removing assets from your legal ownership will keep them safe and help you qualify for the program.

Is an Asset Protection Trust Right for You?

For many people, the benefits of asset protection trusts are immense. They let you set your assets aside legally without having to give them up completely.

All forms of estate planning will help you control your assets. Asset protection trusts in particular will help you keep them intact during your life, while estate planning determines what happens to them after your death.

Asset protection trusts, whether domestic or foreign, can be a powerful tool as part of your financial planning.

We can help you decide if getting a trust is right for you. For a free consultation from an expert estate planning attorney Los Angeles, contact us at McKenzie Legal & Financial today.

Regardless of your goals, desires, and objectives, you need a plan to make your dreams come true. No matter how hard you try, you cannot predict the future or know what is coming your way. Creating a financial plan helps you paint a picture for the future while realizing short-term goals.

Instead of wasting time you’ll benefit from meeting with an estate planning attorney in Los Angeles. You might think it’s too early to start planning your estate officially, but it’s never too early to make positive decisions for your future.

What is Financial Advice?

Most people think they only need to worry about their estate when they are sick or elderly. Financial advice is not just something you seek when things are looking down; it’s also something you do proactively for the future.

Financial advisory services are best thought of as a strategy to achieve your goals through meticulous management of your money. Having an actual plan holds you accountable and is much better than merely trying to tighten your belt.

More importantly, financial advice looks at both short and long-term. Life gets busy, which makes it difficult to think too far into the future. The sooner you start, the sooner you can reach your goals and build your future. Below are some reasons why getting financial advice is in your best interest.

Financial Advice Helps with Income Management

With proper planning, it’s possible to manage your income more effectively. Keeping an eye on how much money you bring in versus how much money is going out, planning helps make the most out of your finances.

Once you start monitoring your expenses, you might be surprised at how easy it is to spend too much money on non-essential items. You don’t necessarily have to give up going out to eat or buying new clothes, but you create specific budgets for each category and then hold yourself accountable.

By paying closer attention to your finances, you’ll notice it’s easier to save money and to avoid overspending.

Financial Advice Helps Prepare for Big Life Events

You won’t just wake up one day ready to buy a new house or car, pay for your kids’ college tuition, get married, or retire. Various big moments throughout your life cost money. Saving money for a down payment and reducing debt is much easier when you have an appropriate plan in place.

The good news is that your plan is flexible; it many ways, it has to be. When you are younger, you may not know the specifics of your long-term goals. Instead of planning for an exact outcome, you might just start planning for potential significant events that you may want someday: your first apartment, your first car, your wedding.

As you get older, you might start a family and adapt your financial goals. Even if you plan for big events, like paying for your children’s college tuition, and then decide not to have children, you’ll be in a much better financial situation. As you reach retirement, you’ll be glad that your finances are in order, so you have fewer worries in your golden years.

Financial Advice Reduces Stress

Getting financial advice is an ongoing process with the ultimate goal of reducing stress about money. Stress is often at its lowest when you are no longer working for your money, but your money is working for you.

Just like you wouldn’t necessarily plan a road trip without having some plan of where you want to end up, financial advice takes away the challenges of meandering through life without a roadmap.

Do You Need Financial Advisory Services?

Even if you see the value of having a solid plan in place, you might think it unnecessary to hire a professional. Some financial advisors have bad reputations of simply being salesmen in disguise. They pressure clients to purchase high-cost products or stocks that earn them the best commission. While there are many nefarious folks out there calling themselves financial planners, there are also many great options as well. For example, a Los Angeles estate planning attorney is often one of the best choices to help plan your future.

An estate planning attorney is a type of lawyer who understands how to advise clients on getting their affairs in order, whether it be to plan for the future or the end of life. We most often think of these lawyers as the folks who help write wills, create trusts, and execute our final wishes. Estate planning attorneys do help in these areas, but can also work with people just starting their lives.

Estate lawyers go through specific training and mentorships regarding finances, real estate, tax law, and more. They also often have extensive networks of professionals from whom they can seek advice.

You might think that you can save a few dollars by using an online template or workbook. While there are things you can certainly do yourself, there are other areas where mistakes can be costly. Working with a professional can mean taking advantage of tax codes, getting the best real estate deals, and keeping on the right side of the law. In some cases, the wrong move can invalidate a great deal of your hard work.

When Is the Best Time to Meet with an Estate Planning Attorney?

There is never a better time to start planning for your future than the present. Simple decisions today can make a significant impact on tomorrow. There are, however, several critical times in life that hiring professional help isn’t just a good idea, but it is essential.

• Near Retirement - Knowing whether you are financially ready to retire is a big question. Navigating decisions about filing for social security and accessing your various retirement accounts can be complicated. Even a one-time consultation with an estate planning attorney can make a massive impact on your retirement.
• Starting a Family - Getting married and having kids creates a slew of financial challenges: joint bank accounts, life insurance, college savings, and more. An estate attorney will help prioritize and protect essential decisions regarding your family.
• Higher Earnings - If you’ve worked hard and now find yourself drawing an excellent salary, it is the perfect time to put your money back to work. From getting the most from your taxes to saving for the future, you want to make the most of your hard work and achievements.
• Self-Employment - People who work for themselves, whether through self-owned businesses or via side hustles, often have different financial questions than everyone else. There are a variety of retirement accounts to consider, and other issues standard employers manage.

Nail Down a Plan

Whether you are just joining the workforce or are ready for your retirement party, you could benefit from having financial advice. While you can make some decisions on your own, nothing beats working with a professional who can offer the best advice while knowing the relevant laws and codes. If nothing else, setting up a free consultation can show you how a financial advisor can help bring your goals to life.

How Can a Los Angeles Estate Planning Attorney Help You?

While it may seem like something only those nearing retirement or end of life should consider, every adult can benefit from having an estate plan. Every situation is different, but having a plan ensures that your Los Angeles estate and finances are in good hands.

The process of planning your estate involves a lot of work. You’ll need to create legal documents, including wills, trusts, letters of attorney, and more. While it might be possible to do some of these things on your own, you’ll always benefit from hiring a Los Angeles estate planning attorney.

What is an Estate Planning Attorney?

An estate planning lawyer is simply an attorney who specializes in handling estate planning matters. While there are no specific or required certifications to take on this focus, most estate planning lawyers acquire this specialization through years of experience dealing with related issues.

The ultimate goal of an estate planning attorney in Los Angeles, CA is to assist clients in preparing for the end of life and the financial legacy that they’ll leave. Most notably, these kinds of lawyers are known for helping draft wills and setting up trusts. Your lawyer can also help minimize estate and inheritance taxes, transferring your assets to your beneficiaries, and helping to navigate probate if necessary.

An estate planning attorney also helps to ensure that you’re prepared for end-of-life scenarios, especially in the case where you are no longer able to make decisions for yourself. These attorneys can help set up living wills, advance directives, and healthcare letter of attorney documents.

With ever-changing laws and tax codes, you must work with a professional. There are a variety of templates available online so that people can write their own wills, but the challenge is that these documents are not one-size-fits-all. Because your situation is unique, you don’t want to trust a cookie-cutter legal document. Moreover, if you make a mistake, it could result in your final wishes not being followed or putting a loved one in a complicated situation after you pass on.

Why You Need An Estate Planning Attorney

Estate planning involves more than a will

People often confuse estate plans with wills. While these two terms are closely related, they are two very different things. An estate plan is a set of legal documents that prepare for your death or disability. A will is one of the legal materials included in an estate plan. This plan also includes things like health care or financial letters of attorney, disposition of personal property and final remains, and more.

Save time, energy, and money

While you may feel like planning your estate is more of a DIY project, there is a great deal of time involved. You might spend countless hours finding the proper forms, learning the appropriate laws, and making sure everything is in order. Even finding and adapting online templates takes time. An estate planning attorney Los Angeles professional  is already abreast with ever-changing laws, which forms to use, and how to move through the process seamlessly.

Beyond saving time and energy, working with a professional will save you money over the long haul. While it may seem counter intuitive to pay for help to save money, estate lawyers can reduce your long-term fees. If you attempt an entire estate plan on your own and make a mistake, it can end up costing a great deal later on. Estate planning lawyers in Los Angeles California also know how to navigate complex tax codes, which can amount to a great deal in savings.

Objectivity

Since estate planning attorneys are separate parties from your life, they can offer objectivity that you can’t afford to yourself. Your lawyer can act as a new voice of reason regarding current and future estate planning needs. There may also be options outside what you are currently considering. Perhaps leaving your entire estate to a child isn’t the most financially sound plan, and setting up a trust would be better. Being able to look at your situation with a fresh set of objective eyes is a huge help.

What Goes into an Estate Plan?

1. Your will

A will is probably the primary document that comes to mind when planning your estate. Your will lays out who you want to take over your assets after you pass away. It also helps ensure that your assets are distributed according to your wishes. If you have children under eighteen, your will also states who will become their guardian. You can distribute your property to a single person, multiple people, or a charity. You are not required to leave anything to family members if you don’t want to. How your assets are handled is entirely up to you.

If you do not have a will, decisions about your assets, property, and minor children are made by a local court. Even if you’ve given verbal instructions to a close personal friend or family member about how you’d like your estate handled, a court makes the final decision absent of an official will.

2. Trusts

Trusts are primarily arrangements that hold assets on behalf of a beneficiary. There are a variety of kinds of trusts, so it’s essential to work with a qualified estate planning lawyer in Los Angeles to ensure they are set up correctly. Some trusts, called revocable trusts, can help your estate avoid probate. Other trusts, known as irrevocable trusts, help to limit exposure to estate taxes. Of course, there are pros and cons to each kind of trust. The best step is to talk to a professional who can help you determine if a trust is right for you and which type will best accomplish your goals.

3. Powers of Attorney and Living Will

A durable power of attorney provides someone of your choosing the legal authority to act on your behalf. The person you select should be someone that you trust to work in your best interest if you are incapable of doing so yourself. If you do not appoint an agent or attorney-in-fact, the judge will either appoint one for you or will make the necessary decisions in court.

4. Letter of Intent

Beyond the legal documents and beneficiary designations, you should also consider drafting a letter of intent. While this document will not supersede a will and doesn’t carry any real legal weight, it helps your loved ones cope after your passing. A good letter of intent contains account numbers, passwords, PINs, and more. Typically, a copy of your message would go to the executor of your estate as well as your spouse or trusted family member.

The Bottom Line

Planning your estate involves countless, complex decisions. Hiring a Los Angeles estate planning attorney is the best way to make sure your plans are complete, legal, and followed after you’re gone. Working with a professional means knowing that you won’t have to worry about what happens to your estate and assets. While it may not be pleasant to consider your own end, there is no better time  than now to start planning for the future of your loved ones.