Asset protection may have vastly different meanings for different people. One way that asset protection is defined is the preservation of wealth to facilitate its transfer to future generations while minimizing the adverse consequences of the claims of future creditors, unnecessary taxes and the costs and risks of probate or intestate (dying without a will) administration.
Common reasons to engage in asset protection include, but are not limited to:
- Protecting professionals and entrepreneurs from law suits. (Especially those with higher risk occupations such as physicians, dentists, lawyers, financial advisors, architects, contractors, builders, and small business owners);
- To protect everyday people from unexpected creditors, plaintiffs, medical emergencies, and long-term care costs;
- To avoid probate and/or expensive and lengthy will contests;
- To protect assets from divorce proceedings and future spouses;
- To protect assets for disabled beneficiaries or children/ grandchildren; and
- To minimize estate taxes.
How Asset Protection Should Not Be Used
Asset protection should not be used as a means to defraud creditors or evade taxes.
How Asset Protection Should Be Used
Asset protection may be used to protect assets for the use of third parties such as a spouse or children. Although self-settled asset protection trusts are not available under New York law, there are a variety of statutory provisions and other options available to New York residents to protect their own assets.
Common Asset Protection Planning Tools
There are many different asset protection planning tools available depending on the situation and the desired outcome, including:
*Liability Insurance; *Life Insurance; *Long-Term Care Insurance; *Exempt Assets; *Business Entities (Corporations, Limited Partnerships and Limited Liability Companies); *Retirement Accounts; *Disclaimers/Renunciations ; *Sales for Reasonably Equivalent Value; and *Trusts.
Exempt Assets
Assets which enjoy protection from creditors under New York law include the following:
- One primary residence (Homestead) but only up to a certain value depending on the county;
- Qualified Retirement Plans, which include qualified pensions, qualified profit sharing plans, IRAs and most other forms of retirement plans;
- Life Insurance Policies (creditors may not accelerate payment of death benefits or special surrender value to satisfy claims);
- Trust Principal is exempt where created by a third party with spendthrift protection;
- 90% of salary for personal services is exempt from claims except where a court determines it to be unnecessary for judgment debtor and dependents. (A court can determine that 100% of salary is exempt, if circumstances warrant);
- 90% of income from a qualifying trust to the extent reasonably necessary for the support of debtor and any dependent of the debtor;
- One motor vehicle not exceeding $4,000 in value above liens and encumbrances;
- Burial plot;
- Social security benefits, unemployment compensation, local public assistance benefits, and veteran's benefits; and;
- Disability, illness, or unemployment benefits.
Asset protection is a complex and always evolving field of law. Which asset protection technique used in any given case depends on various factors including the types of assets being protected, level of asset protection desired, and whether the planning is being done in advance or at the last minute. At the Pierro Law Group, our comprehensive Asset Protection Planning can reduce or eliminate those threats long before they appear and help preserve wealth. The failure to take basic steps such as obtaining adequate insurance and or forming the appropriate business entity may prove very costly if and when substantial creditor claims arise. As a respected New York Asset Protection Law Firm, we can strategize how to best protect your hard earned assets effectively and securely.
Comments
Post has no comments.