Why You Need Both Estate Planning & Asset Protection

If you have a substantial amount of assets, your priority should be to ensure all your holdings are protected, not only for you but for your children as well. You can accomplish this with a foolproof estate plan.

Unfortunately, legal matters are often too complicated and you may feel confused as to what’s the best approach. Considering the term asset protection is often mistaken for estate planning, some confusion is warranted.

Keep reading - we’ll clarify the differences between the two and demonstrate why both are necessary to see to it that your assets are protected, in life and death.

What is estate planning?

While contacting a Naples estate planning attorney directly would help eliminate all the confusion, here’s the problem. Estate planning sometimes includes asset protection, which is why many people just assume that all their assets are protected. This isn’t always the case as basic estate plans typically don’t account for any asset protection, as you’ll see why once we explain the key differences.

Estate planning, in a basic sense, is creating a plan for the distribution and preservation of your assets after you pass away. For instance, this may be accomplished by placing the assets in a trust or drafting a will. 

The confusing part here is that an estate plan may have certain mechanisms that dictate the management of assets during your lifetime. The main goal of an estate plan is to preserve your assets so that they can benefit your family upon your passing. 

An estate plan may account for the scenarios in which you’re unable to manage your financial affairs while you’re still alive. For example, by including power of attorney, you can provide a specific person with the right to act on your behalf in financial decisions without relying on court-appointed conservators.

Similarly, a crucial document in an estate plan is the so-called Health Care Proxy. With it, you can name a person who has the authority to make critical healthcare decisions on your behalf if you’re ever incapacitated. This way, you can make certain your wishes are followed and there are no delays with your care, as well as eliminate the hassle of dealing with a court-appointed guardian.

What is asset protection?

On the other end of the spectrum, asset protection doesn’t have anything to do with what happens once you pass away. It’s strictly limited to protecting your assets from depleting in value or surprising losses while you are still alive. In other words, an asset protection plan can help protect your assets from scenarios such as bankruptcy, business losses, divorce, or creditor claims.

Although this seems like it’s useful only for wealthy individuals, ask any Naples estate planning attorney and they’ll tell you that you can benefit from asset protection even if you fall into the middle-class income bracket. After all, protecting your wealth from life’s circumstances may be even more important if you’re unable to recoup your losses easily.

How estate planning and asset protection can work together

Despite their wildly different purposes, the reason why these terms are often used interchangeably is the fact they are usually put together to form a more comprehensive estate plan. 

An effective estate plan is only as effective as its asset protection strategy. For instance, no estate plan will protect your heirs from loss if most of your assets are lost due to a surprising business failure. 

It works the other way around too - you may have world-class asset protection in place, but your assets could fall into disarray if you’re incapacitated and are unable to make any financial decisions. 

Thus, the only way to make sure without a doubt that you and your family will take full advantage of the wealth you accumulated through the years is via an estate plan that includes solid asset protection strategies. 

With asset protection, you and your loved ones are safeguarded from losing anything due to unexpected financial complications. This protection covers anything from your business interests to homes and even vehicles. With an estate plan, you and your immediate family will have an easier time handling any unexpected events with more ease and less uncertainty, and once you pass away, all your wishes will be respected.

Here are some examples of an estate plan and asset protection working in tandem to offer you full protection. Let’s say you pass away and one of your children goes through a divorce. In that case, an estate plan with asset protection can eliminate the possibility of your child losing their inheritance to a former spouse. 

A similar thing would apply to a situation in which you’re a business owner and you unexpectedly fall ill. If you have the right documentation, you ensure that your business is managed as intended while you’re absent and focusing on your recovery - which is to say the entire plot of Rocky V could have been avoided if Rocky had a solid estate plan with asset protection in place.

When is the right time to consider asset protection?

Creating an estate plan is pretty straightforward and you can do it any time, even right before you pass away or fall ill. Asset protection is more pressing.

If you procrastinate until the moment your assets are under threat, your efforts may end up being easily challenged. A clear example of this is the law against preferential transfer, which is a transfer of assets made to shield them from creditors in case of bankruptcy. According to this law, the court has the right to seize any assets that were transferred within 90 days of declaring bankruptcy.

This is why you should protect your assets before any trouble occurs by contacting a Naples estate planning attorney ASAP.

Start preserving your wealth

If you want to start preserving your wealth and are looking for a Naples estate planning attorney who can make it happen, look no further than Jostock & Jostock P.A. Our law firm has a long history that spans over six decades, and during that time serving the fine citizens of Naples, we helped thousands of individuals protect their assets and safeguard their families when they were no longer around. 

Call (239) 500-8822 or fill out our contact form, and together, we’ll work on an effective strategy that will keep your wealth intact for many years to come.

Note: The information in this blog post is for reference only and not legal advice. As such, you should not make legal decisions based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.