Asset Protection Strategies for Your Estate Plan
This section examines how to protect your assets and manage certain types of financial risks with your estate plan.
What is Asset Protection?
"Asset protection" is often misunderstood as a way to hide assets from creditors or to avoid paying debts. Certainly, it can be used for those purposes. However, asset protection is better understood as a way to manage certain risks that cannot otherwise be controlled with common financial planning tools.
In the table below, we have divided financial risks into three categories. The first category includes "Insured Risks" that can be easily addressed with various forms of insurance. The second category consists of those "Uninsured Risks" which are usually manageable with basic financial planning. Lastly, "Managed Risks" include those events which cannot be addressed by either insurance or financial planning.
Asset protection strategies are best used to address Managed Risks. These risks can only be controlled with documents and strategies that are designed for that particular event. If you are not concerned with any of the risks that fall into the Managed Risk category, then you may not benefit from asset protection planning.
Categories of Financial Risk
RISK MANAGEMENT
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Insured RisksList Item 1
Insured Risks are those types of financial hazards that can be easily addressed with insurance. In most cases, insurance will be the primary option to manage these events:
- Accident Liability
- Professional Liability
- Business Liability
- Property Casualty
- Illness
- Death
- Disability
- Long Term Care
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Uninsured RisksList Item 2
Uninsured Risks include perils which are not usually addressed with insurance, but which may be controlled with proper financial planning:
- Emergency Expense
- Personal Debt
- Business Debt
- Loss of Employment
- Long Term Care
- Estate Tax Liability
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Managed RisksList Item 3
Managed Risks arise from events that can only be managed with asset protection strategies. These events are discussed in more detail in the next section:
- Divorce Settlement
- Waste Estate Dissipation
- Post-Death Family Support
- Loss of Gov't Benefits
- Business Succession
- Excess Long Term Care Costs
- Excess Liability Exposure
- Excess Estate Tax Liability
Asset Protection for Managed Risks
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