Most people would agree that it is not easy to reach your financial goals and accumulate a significant store of wealth. For those fortunate enough to achieve this objective, the focus should shift to balancing wealth accumulation with various asset protection techniques.
Various reports have concluded that the number and size of lawsuits brought against wealthy individuals is on the rise. Unfortunately, most people fail to address this need until after a liability already exists. Unfortunately, most asset protection opportunities are no longer available at such time because of fraudulent conveyance laws.
When it comes to asset protection planning there are a number of different strategies that should be considered. The best techniques to utilize to accomplish this objective vary considerably on a case-by-case basis.
Many people use Nevada limited-liability companies for asset protection. Nevada has some of the best laws in the country designed to protect a member’s interest from attachment by his or her creditors. These entities can also provide significant tax advantages as interests in a limited-liability company can be transferred among the family members at a discount for gift tax purposes.
Other people use a Nevada asset protection trust to protect their assets. Nevada is one of a limited number of states that allow a person to create an asset protection trust for oneself. Nevada’s asset protection trust law became effective on October 1, 1999, yet many doctors, business owners, corporate executives and other high net worth individuals still have not taken advantage of this opportunity.
Assets transferred to a Nevada asset protection trust are generally protected from the transferor’s creditors two years after the transfer to the trust. Nevada law is superior to the laws of many other domestic asset protection jurisdictions in this regard since the required waiting period in most of the other jurisdictions is four years. The trust instrument must be irrevocable in order to provide the desired protection. However, the trust may be structured so that it can be modified by the trust creator to change the beneficiaries at the trust creator’s death. In this way a Nevada asset protection trust can be designed to be very flexible despite being irrevocable.
Some people will combine the Nevada asset protection trust with one or more Nevada limited- liability companies in order to provide two layers of protection. Used in combination these strategies can make it very undesirable for a creditor to pursue the assets contained within these structures.
To provide some sound information to people here in northern Nevada we have prepared a number of free special reports. These reports are available to you for download at any time, and one of the reports covers asset protection strategies.
If you are interested in protecting what you have earned from creditors, claimants, and former spouses you may want to access the information that is contained within this report. To access your copy click this link: Free Nevada Asset Protection Report.
If once you have read the report you have questions or would like to schedule a free consultation, we invite you to contact our firm. We can be reached by phone at (775) 823-9455.
Estate planning involves confronting some sensitive matters. For many people considering marriage, one such issue is the decision to ask your spouse-to-be to enter into a premarital agreement. Those who are entering into a first marriage without a lot of assets and no children may not need a premarital agreement. However, if you're getting remarried after you have enjoyed financial success throughout your life, the decision becomes more complex. This is amplified if you have children from a previous marriage or marriages.
If you are married and live in a community property state like Nevada or California, all earnings and efforts that produce something of value after the marriage are community property. Many people believe that so long as they don't commingle funds and assets remain titled in their sole name that they are protected. This is not the case. While the assets with which you enter a marriage are your sole and separate property, all post-marriage earnings, regardless of where they are deposited or invested, are community property. Our office has handled the administration of several estates where a surviving spouse, or the children of a deceased spouse, brought claims to establish assets titled in the name of the other spouse or his or her estate as community property. In many of these cases assets were diverted to a surviving spouse and/or a deceased spouse's children in contradiction to the intent of the other spouse's estate plan. In addition, many states laws, including Nevada's and California's, allow a spouse to make a number of different claims against the will or trust of a deceased spouse, potentially further frustrating the deceased spouse's estate plan.
To address these problems it is possible to enter into a premarital agreement. Every state has its own requirements for a premarital agreement to be enforceable. In Nevada, it is important that both parties provide a reasonable disclosure of their property and debt. In addition, it is important that both parties are represented by independent legal counsel. The agreement should also be executed as well before the wedding and, and the terms of the agreement should not be unconscionable (i.e., too one-sided). These are just a few of the factors the courts look at to determine the validity of a premarital agreement.
Aside from claims upon the death of a spouse, there is the matter of possible divorce. There is a post on the Psychology Today blog that looks at the high rate of divorce among people who get remarried after having been married previously. This piece states that 67% of second marriages do not last. Third marriages are even more precarious with a 73% divorce rate. When you understand the fact that a significant majority of second and third marriages fail, you may conclude that premarital agreements may not be in poor taste after all. Perhaps they are simply a pragmatic response to a stark reality.
Estate planning for high net worth families is extraordinarily important given the realities of the federal estate tax and any damage that could be done via litigation. In addition to these protections you also have the ability to reach out and support nonprofit entities that you believe in while gaining tax advantages in the process.
This may seem self-evident to anyone who has the financial savvy to have accumulated a significant store of wealth. You must, however, be diligent because constant adjustments may be necessary as things change.
There are changes that take place in your own life such as a divorce, getting remarried, and watching family members depart while others join the family. Of course very significant changes in your financial standing are relevant as well.
In addition to these things that can take place in the life of an individual there are also very important changes that reverberate throughout society as a whole. For example, in 2013 the estate tax exclusion is going down to $1 million while the rate rises to as much as 55%. These parameters will also apply to the gift tax and the generation-skipping transfer tax.
The portability of the estate tax exclusion between spouses ends in 2013 as well. Besides the increased exposure to estate taxes, taxes on dividends and capital gains will be going up if the currently existing laws are not changed in the very near future.
To keep wealth intact you must be ready to adjust along the way, so take advantage of an annual review with your estate planning attorney and stay on top of your financial health.
A trust is often used as an estate planning tool in order to accomplish a variety of goals. At its most basic, a trust consists of a grantor (sometimes called a settlor, or trustor) who establishes the trust, a trustee who administers the trust assets, at least one beneficiary, and assets to fund the trust. Often, all three positions -- grantor, trustee and beneficiary -- can be held by the same person. Beyond that, trusts come in numerous forms that range in complexity; however, one simple distinction centers around whether the trust is revocable or irrevocable. Understanding some of the important features of the two options can help you decide which one is right for you.
All funded trusts, including the revocable trust, avoid probate. What this means is that the funds held in the trust are not required to pass through the often lengthy legal process that follows the death of the grantor, making the trust benefits available to the beneficiaries in a much more timely fashion. A much more important aspect of a revocable trust is that a revocable trust, as implied by the name, can be revoked, amended or modified by the grantor at any time. This feature can be very important if you feel that you may wish to change the beneficiaries or the specific terms of the trust at some future point. This flexibility makes a revocable trust an attractive option for most people.
An irrevocable trust cannot be revoked, amended or modified without court intervention in most states. Under most circumstances, the grantor may not be the trustee or the beneficiary. All control and access is delivered to an independent trustee and a third party beneficiary. What the grantor receives, however, for giving up the ability to control the trust is asset protection, probate avoidance, possible estate tax avoidance and potential income tax and, when the beneficiary is a charity, capital gains tax advantages. These are highly complex strategies and must be entered into with appropriate caution. The expertise of a qualified estate planning attorney should always be sought.
To learn more about living trust lawyers, get in touch with the trust attorneys at Anderson, Dorn & Rader. Call (775) 823-9455 or fill out the form below to get started.
Learn More About Revocable Living Trusts
A Lifetime Trust is an Irrevocable Trust that will pay out an inheritance to a beneficiary for the duration of his or her life. Creating individual Lifetime Trusts for your family provides a wealth of benefits.
If your children are currently minors, a Trust is a good alternative to having your child’s inheritance endure a court-supervised guardianship. Individual trusts also allows you to give your children an even split of your estate.
Many trusts end when a child reaches adulthood or a specified age such as 25 or 30. If you create a Trust that ends as some point in your child’s life, those funds will loose asset protection and may be taken for a court settlement. A Lifetime Trust offers the benefit of continued asset protect. Asset protection can keep your child’s inheritance safe from his or her creditors or a divorcing spouse.
If your beneficiaries have already reached adulthood, a lifetime Trust is still a good idea. Besides providing continued asset protection from creditors it also provides protection when an heir who is not good with money and may spend his or her inheritance too quickly. Such a Trust will also protect your child from losing all or part of his inheritance in a divorce.
Like other Irrevocable Trusts, a Lifetime Trust can pass to your heir outside of probate and without being included in your taxable estate. For estates worth more than a million dollars, estate tax reduction methods are a must. By creating trusts for each heir you will guarantee your loved ones an inheritance that will not be washed away by estate taxes.
By avoiding probate, you may save your family some of the time and cost associated with this harried process.
There are many advantages to having a Lifetime Trust. If you would like to learn more or would to set up a Lifetime Trust, schedule a visit with the living trust lawyers at Anderson, Dorn & Rader.
