Estate planning is important for California residents who have assets that can be transferred to beneficiaries. The process involves more than planning what will happen with assets and the beneficiaries; estate planning is also for protecting assets from future creditors. Asset attachment is determined through fraudulent conveyance laws and, more specifically, through explicit or constructive fraud during a transfer.
One method of asset protection is funding a trust at death. This type of trust provides for a spouse or children. While this is not all-inclusive, some clauses can be specific to the beneficiary meeting certain requirements in order for them to receive any allocation from the trust. In addition to trusts, transferring assets in return for interest in limited liability companies can provide asset protection as they provide a separate entity for the benefits that creditors have very little control over.
Annuities offer a payment over a period of time based on the contractual exchange of assets. Different versions of annuities exist that define how the estate planner or the beneficiary receives the portion of the annuity. Split-interest trusts divide the asset while retaining the right to receive payment and can potentially maximize protection benefits. Charitable trusts are an additional method whereby a portion of the trust goes to charity at the end of a term, and the remainder is provided to the estate planner or the beneficiaries.
At times when creditors could attempt to attach to assets, its imperative to be properly prepared. This will help ensure that the maximum amount of the assets is passed on to the beneficiaries as intended. Protecting assets from creditors today and in the future is an important step, and seeking an experienced and qualified attorney in estate planning law may help maximize asset protection.