The internet can be both a resource and a liability. Searching for asset protection advice online, like searching the internet for medical advice, could end in prudent information or complete falsehoods written by artificial intelligence.
Sometimes, bad advice is obvious. Other times, bad advice may have a layer of plausibility. We’ll cover a bit of both.
MYTH: There’s no harm in waiting until I’m old to arrange asset protection.
There might be a kernel of truth here. It’s certainly possible to wait until you’re 85 to draft an estate plan but waiting that long can introduce many avoidable problems.
Many people will rightly point out that waiting too long can reduce the size of the estate you leave to your beneficiaries because of taxes, but there are other factors to consider. People of any age who are married or have children should have a good plan in place in the event of unexpected accidents or illnesses to ensure financial security for their loved ones.
MYTH: I’m not rich enough to need asset protection.
If you own a home, have moderate savings, investments, a 401k, life insurance or other notable assets, your family will thank you for protecting those assets in your estate plan. The pain of losing a loved one, or seeing them get ill, is much worse when hard-earned assets are reduced or lost due to poor planning.
MYTH: I already have a Will, so I’m covered.
Again, this isn’t entirely incorrect, but it’s certainly not entirely correct either.
A Will is a set of instructions you want loved ones or an executor to fulfill after your death regarding who you want to receive your assets and how you want them distributed.
A good estate plan also covers who you want as your agents in the event you become incapacitated while you are living. Having a Power of Attorney, Health Care Proxy and Living Will insure that your wishes will be handled by the people you choose.
Finally, for people with large estates, an estate plan can minimize the taxes on the assets you leave behind and expedite the distribution of those assets without Court involvement.
MYTH: I’m waiting because once an estate plan is done, it can’t be changed.
This is obviously false. Legal documents are rarely set in stone, though some are easier to amend than others. Even irrevocable trusts can be more flexible than they sound.
The more important point thing you should remember is to update your estate plan when life events happen, such as purchasing or acquiring a significant asset, like real estate, not to mention events like a birth or death in the family.
MYTH: I heard that asset protection is illegal.
While it’s true that people sometimes employ dubious asset protection strategies, for the most part it’s not only legal, but it’s sensible. By knowing the law, an experienced attorney can guide you through your planning.
We’ve only scratched the surface here. The critical thing to remember is that asset protection has innumerable pros and virtually no cons.