Asset Protection Planning & Handling Debts in Estate Planning, Part II

Any plans for handling the debts of a decedent in estates requires very careful planning with an estate planning attorney, otherwise it is entirely possible that creditors or other sources of liability (such as plaintiffs in litigation) could end up significantly interfering with your inheritance plans for your family and loved ones. We’ve previously discussed some techniques regarding how to protect your assets from creditors and litigation in estate planning, such as funding a protective trust that provides for your spouse or children, or looking into a transfer that exchanges for an annuity or interest in an limited liability company (LLC) or limited liability partnership (LLP). However, there are a number of additional protective measures you can take to protect your assets. Below, we provide helpful information on the basics of asset protection planning for your estate. However, keep in mind that it is also crucial to work with an estate planning attorney who practices locally because there are significant differences from state to state:

Retirement Accounts

Retirement accounts are protected as long as they are covered under the Employee Retirement Income Security Act (ERISA).  ERISA covers most employer-sponsored retirement plans, but note that this does not include public employee plans, such as state pension plans and any accounts that are not offered by employers, such as Individual Retirement Accounts (IRAs), savings accounts, etc. However, note that Florida law protects all tax-deferred retirement plans from creditors, including 401ks, IRAs, pensions, and others.

Joint Assets & Tenancy by The Entirety

In addition, when assets are owned as joint assets instead of individual assets, they are more difficult for creditors to go after because they have to be partitioned pursuant to the individual who owes the debt (or otherwise be co-owned with the other owner), and partition actions can be expensive.  Florida also abides by tenancy by the entirety, which means that property owned by a married couple cannot be partitioned. This property also enjoys rights of survivorship, which means that when any co-owner dies, legal title to the property automatically passes to the surviving owner, and this can include any personal or real property owned jointly by a married couple, including bank accounts; as long as both spouses acquired their joint ownership at the same time during the marriage. Note, however, that if the couple or both spouses are indebted to the creditor, the property can be seized.

Separating Yourself From Your Assets

In some circumstances, transferring ownership of certain assets to some family members can also prevent creditors from seizing them, and if you run a business, you should always separate business assets from personal assets so that creditors can only go after one or the other if you or your business is sued.

If You Have Any Questions or Concerns About Protecting Your Assets from Creditors & Preserving for Inheritance, Contact the Best in Florida Estate Planning

It is best to sit down with an experienced Orlando estate planning attorney and go through both your income and assets to determine what is at risk of collection from a creditor and how best to plan for this in your estate. Contact Gierach and Gierach, P.A. today to find out how our Orlando asset protection planning attorneys can best serve your needs.

Resource:

dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/retirement-plans-and-erisa-for-workers.pdf

forbes.com/sites/matthewerskine/2020/10/15/handling-debts-in-an-estate/#554c49137871

https://www.gierachlaw.com/how-to-protect-your-assets-from-creditors-in-estate-planning/