4 Essential Strategies For Protecting Your Family's Assets


Sharek Law Firm LLC

Posted on

Aug 17, 2022


Pennsylvania - Greater Pittsburgh Area

You might think that only the super wealthy need to worry about asset protection planning. But the truth is that if you don’t have millions, you may be at even greater risk. For instance, if you are a multi-millionaire, a $50,000 judgment against you might not be that big of a deal. But for a family with a modest income, savings, and home, it could be devastating.

Furthermore, asset protection planning isn’t something you can put off until something happens. Once you are under threat of a lawsuit, it’s likely too late to protect your assets. Like all types of planning, to be effective, you must have your asset protection strategies in place well before something happens. And your asset protection plan isn’t a one-and-done deal: it must be regularly updated to accommodate changes to your assets, family dynamics, and the law.

While you should meet with us, your Personal Family Lawyer to determine the asset protection strategies that are best suited for your particular asset profile and family situation, here are four essential strategies to consider for safeguarding your family’s most valuable assets.

1. Invest In Insurance

Insurance is always the first line of defense when it comes to asset protection. Anyone can file a lawsuit against you at any time—and basically for any reason. And whether you are ultimately found at fault or not, defending yourself in court can be extremely costly.

The insurance coverage you purchase should not only pay damages if a lawsuit against you is successful, the policy should also cover the cost of hiring a lawyer to defend you in court, whether you win or lose your case. And because a large judgment could exceed your policies’ coverage limits, you should also seriously consider buying umbrella insurance.

Should your underlying insurance policy max out, an umbrella policy will help cover any remaining damages and legal expenses. As your Personal Family Lawyer, we will evaluate your current insurance policies and advise you about the types and amounts of insurance you should have for maximum protection of your assets.

2. Take Advantage Of Statutory Exemptions

Another way to protect your family’s assets is by taking full advantage of federal and state laws that make certain types of assets “exempt” from creditor claims and judgments. Depending on the state, the availability and amount of protection offered by these exemptions can vary.

For example, many states offer a homestead exemption, which protects a certain amount—or even the full value—of the equity you have in your primary residence from creditors. If your state provides a generous homestead exemption, paying down your mortgage could protect funds that would otherwise be vulnerable.

Similarly, federal and state laws also classify many retirement plans, such as 401(k)s and IRAs, as exempt assets. Additionally, some states offer significant, or complete, exemptions for life insurance policies and annuities, as well.

Even though such exemptions won’t offer you total protection, they can provide significant shelter for certain assets. Plus, using statutory exemptions is something that can be accomplished without investing anything—all that’s required is for you to understand how best to structure your investments to take advantage of these protections. Meet with us, your local Personal Family Lawyer to learn what types and amounts of exemptions are available in your area, and how to make the best use of each one.

3. Use The Right Business Entity

Owning a business can be a major wealth-generating asset for your family, but it can also be a serious liability. In fact, without the proper protection, your personal assets are at serious risk if your company ever runs into trouble. For example, if your business is currently a sole proprietorship or general partnership, you are personally liable for any debts or lawsuits incurred by your business.

However, structuring your business as a limited liability company (LLC) or corporation is typically the best move for most small businesses. When properly set up and maintained, both entities create an impenetrable barrier between your personal assets and your business activities. Creditors, clients, and other potentially litigious individuals can go after assets owned by your company, but not your personal assets. Additionally, having the right business insurance in place can help shield your business assets from such claims.

If you own any kind of business, even just a side gig to earn extra income, you should consider setting up a protective entity to ensure any liabilities incurred by your company won’t affect your personal assets. We can help you select, put in place, and maintain the proper entity structure for your particular business operation. If you haven’t done this already, contact us right away to ensure your business doesn’t put your personal assets in jeopardy.

4. Put The Proper Estate Planning In Place

Although each of the above scenarios are mere possibilities, there is one certainty in life—death. It’s coming for all of us, and given this fact, your eventual death—or your potential incapacity from a serious accident or illness before you pass away—is the biggest risk to your family’s assets.

If you become incapacitated or die without proper estate planning in place, your assets and family will face a number of potentially tragic outcomes. Without the proper planning, your assets will get stuck in the court system, which could result in those assets passing to family members you would never want inheriting them, or if the assets eventually do pass to the loved ones you would want inheriting them, those assets could be seriously depleted or even lost. To this end, planning in advance for the inevitability of death is one of the greatest gifts you can give those you love most.

You work way too hard to leave your family’s assets at risk. If you’ve been putting off creating your estate plan—or if you haven’t updated your existing plan recently—now is the time to get it handled. As your Personal Family Lawyer firm, we’ve made estate planning incredibly easy, and we start with a Life and Legacy Planning Session, which is the first step in our Life & Legacy Planning process.

Life & Legacy Planning: Do Right By Those You Love Most

During this process, we’ll walk you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated. From there, we’ll work together with you to put in place the right combination of estate planning solutions to fit with your unique asset profile, family dynamics, budget, as well as your overall goals and desires.

As your Personal Family Lawyer, we aren’t like most estate planning firms—we see estate planning as far more than simply planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today. And this is why we call our services Life & Legacy Planning. Contact us today to schedule your visit to ensure that your assets and loved ones are safeguarded from all potential threats.

This article is a service of Sharek Law Office, LLC. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life and Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

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Are You Ready?

In 2012, at the age of 77, my mother passed away unexpectedly. We had just helped her move from St. George to South Jordan, Utah, where she could be closer to her children and grandchildren. Being that her mother had lived a relatively healthy life for nearly 102 years, we thought Mom would be around for a while longer. Twas not to be.None of us has an expiration date stamped on our label but that day is inevitable. Though the timing of Moms death was a saddening surprise for us, some important preparations, fortunately, had been made. There were a will and a trust. An executor and a trustee had been named. The new home was transferred by quitclaim to, and other assets put in the trust. Assets could be managed and distributed to the beneficiaries, money could be accessed, expenses paid, and, most helpful of all from my perspective, probate avoided.As a trustee, I had authority to, among other things, contract with a realtor and sell the home, receive all income in respect of the decedent, and retain a CPA to file the final income tax return. All the companies and people I dealt with as trustee were very kind and considerate, but everyone expected to be paid any amounts due, including and particularly the IRS.Recent events witnessed and reported reinforce the need to prepare. At a minimum, you ought to have a will, especially if you have young children. Through a will you appoint a guardian to care for your kids if you are gone. Choosing one is, of course, a very consequential decision. You should consider parties who love your kids and are willing and able to do the task. When nominating a guardian, it is not required to have only one person. Co-guardianships are commonly drafted. Also, the guardian does not necessarily have to or want to manage the money you leave behind. It is a matter of personal preference but structuring your estate so that the trustee manages the money, and the guardian manages the kids can be advantageous for everyone involved.If you own a home, at a minimum you should have a living trust. Then the home does NOT have to go through the probate process upon your death. Probate is not always time-consuming and expensive, but it will be longer and more expensive than setting up a living trust now and putting your home in it (and it is all private)! Like I was able to do for my mothers estate when you pass away the trustee can continue managing the home while determining how and when to sell the property. You can preserve more of the homes value by eliminating the need for a fire sale. I kept the house in the trust for a few months until Spring approached and then sold for a very reasonable price.I am grateful to my mother for a thousand things, one of which is that she had her attorney-son draft a will and trust for her (at a terrific friends and family discount!) I estimate we saved at least $5,000 in court costs, attorneys fees, and other related expenses, and probably four- or five-months' time, by having a living trust.So, ask yourself a few simple questions. Have you done what you can to lessen the pain and problems that will come for your family upon your passing? Will property flow how you want it to and to the people you want it to? Will your personal affairs remain private? Will your loved ones know your wishes? Will your minor or special- needs kids to have someone to care for them?Are you ready?

4 Things a Trust Can Do That a Will Cannot

#1 Act as a Disability Plan. A revocable trust provides protection during three phases: what happens while the trust maker is alive and well, what happens if the trust maker is alive but not so well, and what happens after the trust maker dies. Its during the second phase that trust really outshines a will if the trust maker becomes incapacitated, the disability trustee can step in and take care of things immediately and without court intervention.  This keeps the trust property under the control of a trusted family member or friend instead of a guardianship judge. #2 Keep Assets Outside of Probate. Probate is a time-consuming and costly court-supervised public process. A will-focused estate plan lands heirs squarely in probate court. A trust-focused estate plan allows the settlement trustee to step in and carry out the trust makers final wishes without any court involvement or oversight. #3 Keep a Minors Inheritance Outside of Guardianship. A minor who is named as the beneficiary of a life insurance policy, IRA, or payable-on-death account will require a court-appointed guardian to manage the property until 18. On the other hand, a trust for the minor can be created in a revocable trust and named as the beneficiary of the policy or account.  This allows the client to decide how long the trust will continue age 25 or 30, or even the beneficiarys lifetime not just until 18. #4 Keep Final Wishes Private. A will filed for probate becomes a public court record, which means anyone, including predators and your competitors, can go down to the local probate court and read wills and other probate documents. On the other hand, a revocable trust is a private document that remains confidential during life and after death.

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Sharek Law Firm LLC

Elder Law 105 Maple Dr, Warrendale, Pennsylvania, 15086

At Sharek Law Firm we dont just draft documents. We ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life and Legacy Planning Session, during which you will get more financially organized than youve ever been before, and make all the best choices for the people you love.I cherish the opportunity to help secure what you love. I look forward to learning your story, hearing what matters to you, and helping you to discover what's actually needed to keep your loved ones out of court and out of conflict when something happens to you (or them). We specialize in creating wills and trusts to achieve your goals, whether you're located in Pittsburgh or outside of Western PA, we are here to help all Pennsylvania residents.Our law firm was built with your needs of in mind. We understand you are BUSY, and you value ease, convenience, and efficiency. You want to know youve made the best decisions to protect your family and assets, and that your plan will work when your loved ones need it most. We also help make sure your adult children are properly prepared to care for you and what you leave behind.Weve developed unique systems to give you the same access to legal planning as was previously only available to the super-wealthy, so you can have the guidance you need to build and maintain a life of prosperity and wealth. And, to keep your family out of court and out of conflict, which is the greatest risk to the people you love and all you have created, even if youve already worked with a traditional lawyer or created documents online. Contact us to get started today!