Written By Lori A. Curtis
What is this thing called “Asset Protection”? Most of us hear “assets” and we think, “I certainly don’t have any assets. I’m underwater on my house, can barely pay my bills, and my car is a beat up clunker that barely gets me to work in the morning.”
That being said, most of us do need some level of “asset protection.” “Assets” are not just tangible things or the bottom line on your bank account, it includes your family, your ability to care for them, your health, your ability to earn an income, and a number of other things most people forget should be considered “assets.” There are different levels of asset protection and the level that is right for you depends entirely on your circumstances.
I have a sister who finally graduated after many years of school and started a new business just about a year ago. She is now in her 30’s, married, has two kids, and is starting to make money. I’ve been pestering her for years to get her affairs in order and one year even offered to do an entire estate plan for her for free. She never had the time and didn’t think it was important and never thought she had any money, so she never took me up on my offer.
It was only after a death in our family this last year that she woke up and realized that if anything happened to her and her husband, she didn’t have anything in place for her kids. We have several family members who would fight over who gets to take care of her children, and worse, there was no one who would know what she had or where it was or how she wanted it used to take care of her babies. She lives out of state and away from most of our family. If anything happened to her and her husband, one – or several of us, would be forced to start guardianship and probate proceedings in another state just to be able to take care of her children.
It shouldn’t take a crisis for you to put your house in order. We all want to protect ourselves and our family. The following is a list I sent my sister to help get her thinking about her family’s basic needs.
1. Take care of your family. The very MINIMUM you should have is a will. A close second is a trust, which will help avoid probate.
2. Take care of yourself. You should have a durable (financial) power of attorney, health care power of attorney, and living will (medical directive). Make sure your agent knows key information, such as bank account information and what health care you do or do not want in the event you are unable to make the decisions on your own.
3. Take care of your income and income capabilities. Make sure you have disability insurance and consider long term care planning now, before something goes wrong.
4. Take care of your assets just in case something goes wrong. Plan for the worst and then you don’t need to worry about it. There are methods of protecting assets in a way that is completely legal, safe, and will not be construed as fraud on potential creditors.
So what keeps us from preparing now? Time. Money. Lack of knowledge. But proper planning now can minimize the time, costs, and headaches for your family when you are gone. It will be hard enough for them to deal with losing you – don’t burden them with additional problems in dealing with your estate.