Asset Protection Plans
Grand Junction Estate Planning Attorney
Asset Protection Plans and Strategies
Most of us spend years accumulating assets and creating a nest egg, but spend little time or effort in developing a plan to protect it. While all of us can benefit from an asset protection plan, such a plan is particularly critical if you own a business, have rental property or have substantial assets and plan to marry someone of more modest means.
Protecting Your Assets with Prenuptial and Postnuptial Agreements
Traditionally used by couples with previous marriages and/or where there is a disparity of wealth, these agreements are becoming more popular among younger, more affluent couples. A typical arrangement is that each of the parties waives his or her right to property owned by the other prior to the marriage as well as any inheritance received during the marriage. The net effect is that both parties then are free to leave their premarital property or inherited property to children from a former marriage or other family members.
Protecting Your Assets with Corporations, Limited Liability Companies and Limited Partnerships
A common misconception is that forming a Corporation, a Limited Liability Company or a Family Limited Partnership automatically protects all of your assets, including the assets of your business, from creditor claims. While each affords some degree of legal protection, you are always personally liable for your own acts of negligence as well as for any indebtedness or note that you personally guaranteed.
Still, it makes sense from a liability standpoint to create one of these entities if you have employees, since you are not personally liable for the negligent acts of your employees. In other words, the claimant can only proceed against the assets of the business - not your personal assets. Furthermore, even if a creditor has a claim against you personally, creating one of these entities will make it more difficult for the creditor to collect the full amount and thus he (or it) may be willing to compromise the claim.
The laws on asset protection in many states, including Colorado, are in a state of flux. Thus it is essential that you work with an experienced and knowledgeable asset protection attorney to insure that your plan minimizes your personal liability and protects your family.
Protecting Your Assets with Irrevocable Trusts
As a general rule, an Irrevocable Trust can be an effective asset protection device subject to the following conditions: (1) the Trust must be created prior to the time that a creditor claim exists or is pending; (2) the Grantor of the Trust cannot be the beneficiary; (3) the Grantor cannot be the Trustee; (4) the Grantor cannot control the Trust or modify it; and (5) the Grantor cannot receive income from the Trust, nor can he invade the principal of the Trust. If the Grantor violates any of these requirements or if the Trust was created to avoid creditor claims, the court will void the Trust and permit the seizure of the assets held by the Trust.
Estate Planning Lawyer in Grand Junction
The Law Offices of James A. Littlepage, a Grand Junction Estate Planning attorney, has helped families develop asset protection plans since 1993. Mr. Littlepage has prepared over 2,000 estate plans and was recognized with a 2015 and 2016 Five Star Estate Planning Attorney℠ award. In 2014, 2013, 2012, 2011 and 2010 he received the Five Star Wealth Manager℠ award, as seen in 5280 and ColoradoBiz magazines. For assistance in developing an asset protection plan that is tailored to the needs of your family, please contact our Grand Junction office for a complimentary 30 minute consultation for estate planning and probate.
Contact a Grand Junction Estate Planning Attorney at the firm for help with asset protection plans.