What’s an asset? Anything of value that you own. Why should you worry about protecting your assets? What happens if someone gets hurt on your property and they sue you? If your insurance policy limits aren’t high enough, they can come after your assets. Or maybe you’ll have a problem in your business, and a business creditor files a lawsuit to get the compensation they want from your assets.
Long before you find yourself in this position, you should call Parakletos Law PLC. The attorneys of our law firm put faith at the center of our mission, which is to serve our clients as strong and effective advocates. We consider ourselves partners with our clients as we work through their legal issues together.
Call our law firm in Hudsonville today for a consultation with a member of our team. We’re proud to serve the hardworking people of Kent, Muskegon, and Ottawa counties, including those in Hudsonville, Holland, Wyoming, Allendale, Byron Center, Grandville, Jenison, and Zeeland. Let’s talk about how we can serve you and protect your assets for the future.
People often think of estate planning when they hear the words “asset protection.” However, estate planning focuses on transferring wealth after death, while asset protection involves structuring assets to shield them from potential future claims. Asset protection differs from tax planning, which aims to minimize tax liability.
Properly structured asset protection can make it difficult or expensive for creditors to pursue claims. In many cases, asset protection can insulate assets so they are separate from the owner, so that creditors cannot reach them in the event of a claim.
To protect your assets in most situations, you must transfer ownership to another entity, such as an irrevocable trust or an LLC. If the assets are no longer in your name, they are not legally your assets, and creditors or lawsuits can’t reach them. A seasoned lawyer from our law firm can help you determine the best way to protect your assets.
You do. Anyone who is exposed to financial or legal risks needs asset protection. Medical professionals, lawyers, real estate developers/investors, or business owners need asset protection. So do people with significant personal wealth. Even people with more modest means can benefit from asset protection, as anyone may face a lawsuit or a creditor claim seeking to acquire some or all of their assets.
When you’ve accumulated wealth, you need to keep it until you choose to pass it on or spend it. However, other people can legally acquire some of your assets. Here’s how:
Our attorneys can help you protect your assets through a variety of legal instruments and business structures. These structures can protect your assets while you live, and, in some but not all cases, that protection can extend to your beneficiaries.
Trusts can be either revocable or irrevocable trusts. When you, the grantor, set up a revocable trust, you have the authority to change or terminate the trust at any time. Even though you fund the trust with your assets, you retain control over them, so they remain yours. Revocable trusts are not helpful for asset protection.
An irrevocable trust is different. When you create an irrevocable trust, your best option is to make someone else the trustee. Then you transfer ownership of your assets to the trust. You no longer own those assets. The trustee manages them according to the instructions you set out in the trust document. This kind of trust protects the assets it holds, as you are no longer the owner. Creditors cannot reach them.
Once a person places their assets into an MAPT, they cannot be removed. This feature protects against Medicaid’s asset limits because, once placed in an irrevocable trust like the MAPT, the assets no longer belong to the grantor. Timing is important for a MAPT. Medicaid has a five-year look-back period. That means you may face delays or penalties if you transferred any asset during that period.
Using a Medicaid trust allows the grantor to remain eligible for government benefits (Medicaid) while still allowing their assets to be passed on to their heirs.
Your lawyer can draft prenuptial (antenuptial) and postnuptial agreements to protect your assets. A prenup can specify that future earnings, investments, business ventures, and other assets you acquire are your separate property. The prenup protects these assets from divorce, and you can place them into trusts or business entities to shield them from potential creditors. Postnuptial agreements function in essentially the same way, but they are created after you marry.
When you hold your assets in a limited liability company (LLC) or a corporation, you create a legal barrier between your personal and business assets. Transferring assets into either of these types of entities allows you to retain control over your property while protecting it from creditors. People often use LLCs to hold investment assets and corporations for business operations.
You can use insurance to protect your assets. Aside from the usual homeowners and auto insurance, you can purchase an umbrella policy that can help protect your assets from various liabilities. The drawback here is that you can be sued for more than your insurance policy covers. Insurance should be used in conjunction with other strategies. In Michigan, life insurance proceeds that are meant to provide for the decedent’s dependents are exempt from the decedent’s creditors.
Under both federal and Michigan law, employer-sponsored 401(k) and IRA plans may be exempt from creditor claims. Michigan’s homestead exemption does not completely protect you from creditor claims. It shields a portion of your home equity from most unsecured creditors, but property tax, child support, and mortgage obligations may still attach.
Asset protection must be implemented before known legal claims arise. If you transfer assets to a Medicaid trust less than five years before you need Medicaid, you can be fined, and your benefits can be delayed. Trying to shield assets after a lawsuit begins is likely illegal and can result in fines or legal action against you in addition to the existing creditor claim or lawsuit. A lawyer with our Hudsonville firm can help you identify your options and make transfers before there’s an issue.
The time to contact an asset protection attorney in Hudsonville is now. Even if you don’t think you have much in the way of assets, a consultation with an experienced lawyer from Parakletos Law PLC can ease your mind and give you the information you need to protect what’s important to you.
Don’t wait until you’ve been threatened with a lawsuit to contact our law firm. By then, it’s too late. When you work with us, you’ll find that we are dedicated to working on your behalf, offering support, and motivating you to reach your goals. We’ll walk beside you throughout any legal journey in your life, and you will be our priority.
Call our Hudsonville law firm today for a consultation about how we can help. We serve Kent, Muskegon, and Ottawa counties, including the towns of Hudsonville, Holland, Wyoming, Allendale, Byron Center, Grandville, Jenison, and Zeeland. Let us listen to your story and offer you the practical advice you need to prepare for the future with confidence.
