Asset protection is an often overlooked but potentially critical part of estate planning. When performed correctly, asset protection can safeguard your wealth from seizure by creditors and other potential claimants. It is sometimes used by elderly or infirm individuals to establish eligibility for state and federal government benefits. However, any asset protection plan must avoid unlawful practices like fraudulent transfer or concealment of assets.
The core feature of asset protection is that you relinquish ownership but not control of the property you wish to protect. In essence, you are making the assets inaccessible to yourself as well as to creditors while reserving the power to manage those assets. However, you must receive reasonably equivalent consideration for the assets so that the transfer is not seen as fraudulent. Here are some asset protection strategies that can be considered:
It’s critical to keep in mind that asset protection planning is meant to shield property from future creditors, not current ones. If you try to transfer assets after a claim or liability occurs, the courts may deem the move a fraudulent conveyance and block the transfer, leaving the assets unprotected.
If you are interested in learning more about asset protection, we invite you to reach out to the legal team at The Sterling Law Group, A P.C. Based in Roseville and Sacramento, our estate planning lawyers have years of experience helping California business owners protect their hard-earned assets. To arrange a consultation, call 916-790-9202 or contact us online.