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What is the point of asset protection planning?

On Behalf of | Dec 23, 2021 | Estate Planning |

Many people in the Bay Area may wonder why they would need to think about protecting their property during the estate planning process.

After all, usually those who are thinking about complex estate planning have plenty of assets that they are wanting to pass down to their loved ones.

While this is not universally true, many do not have to seriously consider that their legacy will get swallowed up by their own creditors.

But it is important that San Jose residents think in the long term about asset protection.

For example, some people may be financially stable themselves but have loved ones whom they know are themselves not financially responsible. In other words, any gift or inheritance their loved ones might receive would immediately go to pay down debts or be spent in a way that the benefactor would not approve.

Financial responsibility is not the only concern in this respect. Loved ones can experience job losses or serious medical problems that lead to overwhelming debt through no fault of their own.

In other cases, a divorce or failed business can leave a child with creditors eager to get a share of the family’s fortune.

The trick of asset protection is to make sure funds are shielded from creditors

Like other states, California allows those in debt to exempt certain assets, keeping them out of the hands of creditors. While these exemptions often apply to bankruptcy, debtors can rely on them outside of the bankruptcy process as well.

There are several estate planning devices which Californians can use to make sure that they legally hand on their property without having to watch it go to a child’s or other loved one’s creditors.

San Jose residents who want to craft an estate plan mindful of his or her loved ones’ asset protection needs should evaluate their legal options carefully.