The first thing that many people think of when they hear the term estate planning is saving money on tax payments. However, protecting the value of assets from creditors for the benefit of the asset holder as well as the beneficiaries of his or her estate is just as important.
It becomes more important to understand these estate planning and probate procedures following periods of financial turmoil. In these times, a number of individuals and other entities may turn to litigation in an effort to recoup losses incurred during an economic downturn.
Understanding fraudulent conveyance laws is a key to identifying when assets may be at risk for being targeted in a lawsuit. These laws render a transaction void whenever explicit or constructive fraud is detected. When a transfer is voided by the laws, a creditor who may not have had any involvement with the original transaction may find a way to use fraudulent conveyance laws to attach assets to a lawsuit.
The threat of a transaction being considered fraudulent can be eliminated by structuring a deal that provides for reasonably equivalent consideration. Using a protective trust to provide for children or a surviving spouse is one estate planning tactic that provides reasonably equivalent consideration. Other methods include the trading of assets for interest in an LLC and exchanging an asset for an annuity that is protected from creditors.
Proper estate planning is essential to protecting assets earned in life. Careful planning will also provide the asset holder with the peace of mind that comes from knowing his or her heirs are protected financially. Issues pertaining to estate planning and probate law are complex and too important to risk not getting right the first time. Individuals may find it helpful to speak with an attorney who is familiar with this area of the law rather than trying to complete the process on their own.
