Protecting Your Wealth: Asset Preservation in Estate Planning
It’s commendable that you have worked hard to reach your position in life and want to protect your legacy for your loved ones. If you’d like to protect your wealth from the likes of creditors, lawsuits, judgments, and other potential obligations, you need some dependable asset preservation strategies.
Still, whether you are developing an asset preservation and estate plan or leaving money to grandchildren, you’ll want to work with a knowledgeable attorney. The TGQ Law Firm has over 20 years of experience helping people protect their legacies as a top Michigan estate planning attorney. Read on to learn the asset preservation strategies our legal team recommends.
Family Limited Partnerships (FLPs) for Asset Protection
Family limited partnerships are unique vehicles for protecting your family businesses, investments, and other assets. The FLP consolidates these assets into a single structure, including general and limited partners.
FLPs offer control in a centralized form as general partners make decisions. These vehicles also offer tax advantages by reducing or eliminating gift and estate taxes. Even younger generations can become involved, while gifts attract favorable gift taxes.
Think about strategically dividing income from the partnership among members in lower tax brackets to ease your tax burden and augment retirement planning strategies. FLPs provide limited liability to the partners, who will not be responsible for the debts. That’s another layer of protection for assets from creditors and potential lawsuits.
Understanding the HEMS Standard in Trusts
The “HEMS Standard” in the context of a trust stands for Health, Education, Maintenance, and Support. Through these trusts, you can support younger beneficiaries until they can manage the funds themselves.
HEMS Standard Benefits may include the following:
- Control: The trustee makes decisions based on the recipient’s health, education, maintenance, and support needs.
- Flexibility: The trustee has more control over fund distribution.
- Safety: The standard can prevent a beneficiary from withdrawing funds for frivolous reasons in favor of appropriate reasons.
- Precision: You can adjust the language to protect your loved ones and better meet their needs.
HEMS presents a versatile tool for covering school tuition, housing expenses, and medical care, including supporting your loved ones who have special needs.
Protecting Digital Assets in Estate Planning
Modern estate planning now needs to consider online accounts, digital currency, and intellectual property. Why not start by taking an accurate inventory of your digital assets? You may also want to start documenting the usernames and passwords of online accounts.
However, be wary of storing these two documents together. Professionals suggest keeping a password list in a password-protected document, in a locked safe, or with your attorney.
Thereafter, you’ll decide where you want each asset to go and appoint a digital executor to fulfill your wishes regarding digital asset preservation. You can formalize this digital estate plan by noting it in your will or a codicil. Since wills become public information, digital estate plans are usually a separate entity.
Practical Tips for Leaving Money to Grandchildren
A generation-skipping trust lets you leave money to your grandchildren while keeping it fully available for your spouse and children. You can leave a hefty sum to your grandchildren or future generations without the concern of huge tax burdens. That means these arrangements can greatly reduce your tax liability while maximizing the funds you leave to your loved ones.
You can also gift money annually to another person, which will be exempt from estate, gift, or generation-skipping transfer taxes up to a certain threshold. By making these gifts part of a trust, you can help younger children responsibly handle the funds. Alternatively, education funds or trusts could streamline your overall asset preservation strategy.
Contact The TGQ Law Firm’s Michigan Estate Planning Attorney for Asset Preservation Services
Family limited partnerships, generation-skipping trusts, and the HEMS standard are all fairly advanced asset preservation strategies that may help you protect your assets for the sake of your loved ones. Utilizing these strategies means carefully considering each one and then working those details into your estate plan. Understandably, enlisting trusted legal assistance makes enacting these strategies properly a lot easier.
Are you looking for guidance on preserving your assets? Contact The TGQ Law Firm in Ann Arbor, Michigan, at (734) 707-3232 to schedule a consultation to discuss your asset preservation needs.
Disclaimer: This article is not intended to be legal advice. Everyone’s situation is different and legal advice is only properly given after having reviewed your specific situation.
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