Most of us work a lifetime to create a safety net for our families and retirement. This must be protected at all costs. It must survive irrespective of any virus or other unforeseen calamity.
While no perfect mousetrap will ever exist, there are asset protection tools that dramatically reduce risk, taxes and conflict amongst future generations. Historically, more people will suffer a shark bite or die from a virus than spend a few hours creating an asset protection plan for their family.
Many wait until creditors are at the door and then try to hide assets. Perhaps the most egregious and ineffective action is to transfer assets from a spouse with financial problems to the spouse without financial problems.
The primary asset for most of us is our home. Regardless of the amount of equity, we all want to prevent our families from being forced out of our homes. Ironically, one of the most effective asset protection tools is explicitly designed to protect the family home.
Specifically, if spouses hold title to their home as tenants by the entireties, the home is protected from unrelated debts of one spouse. Simply stated, even if one spouse accumulated hundreds of thousands of dollars in unsecured debt, the family can retain the home and creditors cannot force its sale. The spouse without debts enjoys a right of survivorship which entitles him or her to maintain title to the home free and clear of the deceased spouse’s debts upon the death of a spouse with debts.
Again, the natural and common reaction of a spouse with debts is to transfer assets to the spouse without debts. Frequently, this includes the home. Do not transfer your home to your spouse. This destroys the tenancy by the entirety. The United States Supreme Court, in US v. Craft, held that if one spouse transfers his or her interests in a home to the other spouse, the tenancy by the entireties cannot be recreated by transferring the property back to the other spouse.
Bottom line, spend a few hours with an asset protection specialist at least every few years to insure that your family is protected from the next calamity.
The attorneys at Cooper Levenson, PA can assist you in asset protection planning and answer any other questions you may have related to your business. Please reach out anytime to Eric A. Browndorf, Esq. at firstname.lastname@example.org.