Asset protection is important regardless of your dad’s lack of wealth as it involves protecting your wealth from seizure. Some assets are protected from creditors, but not all are. That’s important to remember. Your dad could end up with a lot of medical debt and that unpaid medical debt may need to be paid from his estate.
The rules can vary from one state to the next. You can spend time trying to make sense of the laws, but you don’t want to make a mistake. It’s important that your dad sits down with an elder law expert to go over the steps he needs to take to protect his assets from creditors and lawsuits.
Steps in Asset Protection
For asset protection to happen, the first thing is to go over all of the assets your dad holds. This includes bank accounts, life insurance policies, personal items like jewelry and antiques, retirement funds, stocks, etc.
After a full list is established, he needs to talk to his lawyer about how he’d want his money and assets distributed to his heirs. He may have one child who hasn’t spoken to him in 30 years and wants to ensure that those assets are not distributed to that child and that that child doesn’t have any claim to them.
Once the attorney knows this information, a plan is drafted to ensure that the assets are protected from creditors and unexpected lawsuits. Why should your dad use an elder law expert for this?
There are different types of trusts to protect his assets. An irrevocable trust is great for protecting against lawsuits and creditors, but your dad cannot make changes to it or cancel it. A revocable trust allows your dad to make changes while he’s alive, but creditors can tap into them after your dad dies.
A testamentary trust is created through a will, but the assets in a testamentary trust will go through probate. Then, there’s an asset protection trust that keeps your dad’s assets safe from creditors or bankruptcies and is considered very secure, but it’s more expensive to create.
Hire an Expert in Asset Protection
If your dad has a home, it may already be protected. Certain retirement plans and pensions are also protected. Does he have a life insurance policy? Do you know about it? If he never told anyone, there’s no way for you to know to claim it. The insurance company isn’t keeping track of his status and informing you.
Knowing what is protected and what isn’t can be challenging to the layperson. Having a full list of assets is essential. This is the first place to start. After doing that with your dad, hire an elder law specialist to discuss asset protection and ensure your dad’s wealth isn’t at risk.
If you or a loved one need assistance with Asset protection in Mountain Brook, AL contact The Alabama Elder Care Law Firm, LLC today. (205) 390-0101