Clients often ask me about protecting their estate. Sometimes they are not specific and I have to ask them: Who or what do you want to protect your estate from? Often the reply is something vague about the government or taxes. After some discussion, we usually narrow this down to the following risks:
1. Protecting your estate from the cost of nursing home care.
2. Avoiding probate.
3. Protecting against lawsuits.
4. Protecting against possible civil unrest or major changes to our political, tax or legal system.
All of these financial risks are valid concerns but require a client discussion of the potential risk and the client’s risk tolerance. There are many persons who have lost their hard earned life savings or their business because they did not plan for one of these events.
There are certain types of trusts and other legal arrangements that can accomplish protection against all these threats to preservation of your estate. However, especially with respect to items 3 & 4 above, you must do this planning prior to any actual lawsuit or government action. There are laws that will prevent you from successfully implementing this type of planning if the government or a creditor has already taken action against you. Legal planning in advance is essential for a successful estate plan to protect your estate.