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Estate Planning And Wealth Preservation Strategies

Recently I have been receiving many questions from clients concerning their trusts, wills and how to position their assets to take advantage of certain protections. I decided to put together this short memorandum to address some of those concerns. If you have a trust, in certain situations it may be better not to transfer your assets into your trust while you are alive. Rather, I would suggest that, if you are married, you own your assets as Joint Tenants by the Entirety (“JTBE”).

If your current accounts are titled as “Joint with Right of Survivorship” or as “Husband and Wife” or any other designation that is not JTBE, then you need to close that account and open a new account in the name of the two spouses as JTBE.

A JTBE account may offer some form of asset protection with respect to married couples. If one spouse is sued, the JTBE account may be protected from that spouses general creditors. The JTBE account must be setup initially as a JTBE account and specifically say that it is a JTBE account. It should be noted, if a spouse dies or if there is a divorce, then the JTBE protections will cease.

When setting up a JTBE account you may want to ask if the institution will allow you to also appoint a beneficiary to that account in the event of your deaths. The beneficiary of that account could be individuals or your trust.

One asset that you do not want to own jointly is your automobile. If the automobile is owned jointly and only one of you is in an accident, then all of your joint assets could be at risk, including your JTBE assets. Therefore, it is strongly recommended that you do not own automobiles jointly with your spouse or anyone else.

Also, verify your automobile insurance coverages. Most people are grossly underinsured. I would strongly recommend an umbrella/excess liability policy with an uninsured motorist rider. Check with your automobile or homeowners insurance carrier to obtain a price quote. At an absolute minimum, I would suggest at least a $1,000,000 umbrella/excess liability insurance policy.

Protecting your assets is an important piece of the estate planning puzzle. These steps need to occur prior to experiencing financial hardship or being involved in any lawsuits.

In addition, certain assets may provide you with better protection. For example, your homestead (primary residence), cash value life insurance policies, annuities, 401(k)’s, IRA’s, and pension plans provide you with certain additional protections against unsecured or general liabilities. Also, there are other entities which can be used to protect your assets, such as certain types of trusts, limited liability corporations or partnerships. These other types of entities must be established properly in order to maximize their usefulness.

If you have any questions or concerns, please give my office a call and we will schedule an appointment to discuss these matters further.