Category Archives: Asset Protection

Asset Protection, Estate Planning

Do 529 Plans have Tax benefits?

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When you are creating an estate plan, it is important to obtain tax benefits where possible. For general information regarding 529 Plans, please read our blog titled “Saving for College Through a 529 Plan.” This blog will discuss the tax benefits of 529 Plans, such as:

  • Federal tax benefits. Even though your contributions to a 529 Plan are not deductible from your federal taxes, your investment in the education savings account will grow tax-deferred. Additionally, when the beneficiary withdraws money to pay for college, the distribution is federally tax-free.
  • State tax benefits. If you created a 529 Plan in Utah and you reside there, the income is also exempt from state income tax.
  • Control over account. If you are making donations into the account, you retain control over it. For example, a parent that opens the account for the benefit of his or her child. With a few exceptions, the beneficiary has no rights to the funds. The donor/owner of the 529 Plan can decide when distributions should be made and for what purpose.
  • Tax reporting. Until withdrawals are taken from the account, you will not receive a Form 1099 to report taxable or nontaxable earnings.
  • Deposits. Most state 529 plans do not have income limitations or age restrictions. In fact, you can contribute substantial sums if you desire. Many state plans allow more than $300,000 per beneficiary.
  • Simplicity. Establishing a 529 Plan is a simple way to save for college. You can typically arrange for automatic deposits out of your bank account and the investments of your account are handled by the plan. In other words, you have the peace of mind knowing that you’re saving for college without any high maintenance demands.

It should be noted that some people prefer to use an irrevocable trust for education because of the flexibility a trust provides and the ability to control the funds while serving as the trustee. If you are trying to decide whether a 529 or an irrevocable trust would be more beneficial for you and your loved ones, call us today.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Asset Protection

Is your Loved One a Victim of Financial Abuse?

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If you have an elderly parent or other loved one that is a senior citizen, it is important to understand that they are particularly vulnerable to financial abuse. This is especially true if they have a mental or physical challenge.

There are certain signs that you should be aware of that may indicate your loved one is being taken advantage of. If you see a pattern starting to occur, you should take immediate action and intervene. Below are a few “clues” that financial abuse may be occurring:

  • You start noticing personal items or assets are missing
  • Your loved one has new “friends” that are influencing him or her
  • Your loved one starts receiving past due notices on his or her bills
  • There are unexplained withdrawals or transfers from the senior’s bank accounts
  • The elder’s banks statements are not being delivered to his or her home anymore
  • There are suspicious signatures on the senior’s checks
  • Your loved one is not aware of his or her financial situation and cannot explain certain financial arrangements that have been made
  • The senior has signed new legal documents, but cannot explain why it was done or what the documents mean

The above list is not exhaustive. If you believe your elderly loved one has been the victim of financial abuse, we can help. As specialists, our elder law attorneys can help you figure out what has happened and how to correct it. Along with untangling the financial mess, we can assist your loved one with creating an estate plan that truly carries out his or her wishes.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

 

Asset Protection

Asset Protection with Generation-Skipping Trusts

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Couple giving two young children piggyback rides smilingIf you have worked hard all your life to accumulate your wealth, whether it is a small amount or a significant amount, it is important to protect your assets. Estate planning is a critical element of asset protection efforts. In order for estate planning to be effective, you should try to identify all of the potential “threats” to your assets. Common examples include taxes, the expenses associated with probate actions, former spouses, and creditors.

There are numerous ways we can help you avoid certain threats that could negatively impact or deplete your assets. One option to consider is placing your assets into a generation-skipping trust. As indicated by the name, you skip a generation when naming beneficiaries. In other words, you name your grandchildren as the final beneficiaries instead of your children. This may sound shocking, but there is a twist to this arrangement. Your children can be life beneficiaries, with the Trustee having the discretion to distribute income or principal of the trust to your children during their lifetime.

As a result, because your children do not own or have the right to assets in the trust, the assets are not available to attack by their creditors. The remaining trust assets left after your children die are transferred to your grandchildren. In sum, a generation-skipping trust impacts ownership, not the benefits received or the ability to use trust assets.

The generation skipping type of trust benefits your children and grandchildren, but not necessarily you as the Grantor. If you are working to protect assets for your benefit, there are other strategies such as use of Family Limited Liability Companies (“FLLC”), or Domestic Asset Protection Trusts, or even more complicated arrangements using Off-Shore Trust arrangements.

Generation skipping trusts are just one example of how you can protect your assets. Let us review your individual circumstances and help you understand your options for asset protection and tax advantages for your family. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

 

Asset Protection

Asset Protection Through Family Limited Liability Companies

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11102865_s (2)A Family Limited Liability Company (FLLC) can be an effective tool for protecting your family’s assets from creditors. The FLLC can allow you to maximize your family’s net spendable income while also provide you with estate planning options.

What is a FLLC?

The FLLC is a form of business or investment entity ownership, which is generally created to provide its owners with significant protection from creditors and potentially substantial estate and gift tax savings. It usually involves several owners who are related to each other and it operates under a restrictive operating agreement that outlines the terms upon which the FLLC will do business.

How does a FLLC work?

The most common arrangement involves a senior member creating the FLLC and serving as the Managing Member. Children and grandchildren can be named as Members of the FLLC, but without any management authority. Typically, the senior member funds the FLLC with money, real property, stocks, bonds, artwork, or other assets. Percentages can be assigned to each Member (children or grandchildren) with discounts being allowed as to the valuation since they are receiving a minority interest (without any control authority over the FLLC). Each party’s contribution to the FLLC determines liability for debts. Additionally, the FLLC provides significant flexibility since ownership shares can be modified as your family or business changes.

What are the benefits of a FLLC?

A FLLC can allow you to shift or reduce income tax and estate tax liability among generations in the family. The FLLC is often treated as a partnership for income tax reporting, with flow-through taxation, which means the profits and losses of the entity are passed through pro rata to the members. Using a FLLC for estate planning purposes allows you to reduce the size of the senior member’s estate and contributions to the FLLC are not taxable events, while also providing asset protection from lawsuits against the individual members of the family.

By transferring ownership to multiple owners through the FLLC, creditors of any member are unable to force a dissolution of the business entity and their remedies are restricted to obtaining a “charging order” which provides only that the creditor receives distributions when the members receive distributions. Since nothing requires that a FLLC distribute profits, it is not very beneficial to the creditor. Thus, the FLLC provides a distinct benefit for asset protection purposes.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Asset Protection

Guidelines for Asset Protection Planning

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16430757_sIf you are wondering if you should be taking steps to protect your assets, you probably should. Whether you have a high-risk job or you are an average person who wants to make sure you are protected if a difficult situation arises, you should contact us to discuss your options.

Asset protection planning can take a variety forms, but all of them focus on strategies for safeguarding your most valuable assets from potential creditors. Just as important, however, is to take steps to ensure that nobody ends up in legal trouble, including going to jail for contempt or fraud for engaging in the process.

Below are a few guidelines to keep in mind when you are developing asset protection strategies:

  • Start planning as soon as possible. It is imperative that you create asset protection tools before a claim or liability arises. The longer your protections have been in place, the less likely a creditor can claim they are a “fraudulent transfer.”
  • Be wary of late planning. Any asset protection planning that occurs after a claim arises will likely make matters worse. In fact, a debtor and whoever assists him in fraudulent transfers can be held liable for the creditor’s attorney fees. You also lose any chance of obtaining a bankruptcy discharge.
  • You still need insurance. Even if you have established an effective asset protection plan, you still need liability and professional insurance. Your insurance will help pay any legal fees, pay to settle claims, and even help you survive a fraudulent transfer claim.
  • Business entities protect business assets. If you form a corporation, partnership or limited liability company, it should be used to protect business assets. Placing your personal property in a business entity does not ensure they are protected because an entity can be pierced by a creditor under a theory of “alter ego.” If successful, the creditor will have access to your personal assets. It is much smarter to create a trust to protect your personal property. However, many people misperceive that their estate planning trust protects their assets. This is not the case. Only certain types of irrevocable trusts work for asset protection.
  • Don’t keep too much control. An effective asset protection plan strives to provide you with sufficient control so that the assets don’t disappear, but not so much control that other parties can argue that you and the asset protection tools are one and the same.

If you are interested in exploring your asset protection options, call us today. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.