Asset Protection 101
Is protection from creditors, predators, lawsuits and bankruptcy important to you? This is a common question I will ask my clients as we identify their estate planning goals. If their answer to my question is “yes”, we have a discussion about asset protection planning. Asset protection planning has become especially important in today’s litigious world, and involves legal strategies to protect your hard earned assets from creditors, predators, lawsuits and bankruptcies. This type of planning is especially important for professionals, such as doctors and lawyers, as well as business owners, as their personal assets may be at risk due to the nature of their work. With recent expansions in asset protection laws, particularly in Missouri, the answer for many of our clients can be found in estate planning strategies. Several useful tools are outlined in this article.
Married Couples – Qualified Spousal Trusts
Husbands and wives enjoy asset protection when assets are jointly owned, and only one spouse has claims from creditors, but what happens if those assets are transferred to a trust for estate planning reasons? On May 13, 2011, Missouri passed a new statute addressing this issue by creating a “qualified spousal trust”. The qualified spousal trust gives a husband and wife the ability to transfer property to a trust, and retain the asset protection from the claims of one of the spouses.
Individuals and Business Owners – Limited Liability Entities
Limited liability entities, such as limited liability companies and corporations, give business owners and individuals the ability to separate business assets and personal assets. Once this separation has been achieved, and if certain formalities are followed while operating your business, a business claim cannot be satisfied from the owner’s personal assets.
Everyone – The Missouri Asset Protection Trust
Currently, Missouri is one of a handful of states that allow an individual to create an asset protection trust. A Missouri Asset Protection Trust is an irrevocable trust that allows an individual to transfer their assets into the trust, retain the ability to be a beneficiary of the trust and also retain certain powers and controls over the trust, and have protection from future creditors and bankruptcies.
Planning Ahead is Crucial
Many of the strategies outlined above require planning before your issues arise. Missouri law allows creditors to satisfy claims from assets that are transferred to an asset protection vehicle while known claims are pending. If protection from creditors, predators, lawsuits and bankruptcy is important to you, act now before it is too late.
Written by Brian G. Quinn, Attorney with Quinn Estate & Elder Law