The term estate planning itself tends to lean towards the idea that these plans only matter after we are gone. It is true that a large part of the focus is placed on how our assets will be distibuted after death, but let us not forget that these tools provide significant benefit during life as well.
For instance, one type of trust is gaining popularity and replacing the use of a popular alternative for asset protection. Whether it is a surgeon who has a high risk for a malpractice lawsuit, a business owner facing environmental or other regulatory issues or even a parent worried that their child may get a divorce, tools that prevent creditors from laying claim to them are important.
Offshore accounts were once, and still are, a popular option for shielding assets from creditors. However, the Internal Revenue Service has tightened the reporting restrictions on these accounts, and the agency is coming down harder on those taxpayers who fail to report or pay the associated liability.
As a solution, many financial and estate planners are directing their clients towards another, on-shore option. A domestic asset protection trust is a way to proactively protect these financial interests. The irrevocable trust also provides this benefit to any claims made against the estate.
Although these trusts can only be created in 15 states, they are still available to those that live in a jurisdiction where this type of trust cannot be established.
An estate planning attorney in Texas not only provides a client with available options in the state, but will also advise on all options. The attorney can also work with any third-party professional necessary to create a complete plan.
Source:The Wall Street Journal, “Creditor-Proof Trusts Replacing Offshore Accounts,” Arden Dale, Aug. 8, 2013