Asset Protection and Estate Planning

Each year people die who have not prepared a will. When this occurs, the law dictates how an individual's property is distributed, and a court may pick the guardian of your children. Dying without an estate plan can also increase the likelihood that your surviving loved ones will not be cared for. Too many people put off addressing these important issues. Don't let it happen to you.

Creating Effective Estate Plans in California

Everyone has different estate planning needs. Your lawyer should work with you to create a plan that is tailored to your situation.

At the California law office of Ronald W. Hillberg, we offer complete estate planning services for our clients in Stanislaus County. From simple wills and trusts to advance health care directives and guardianship designations, we will draft the documents you need to protect your loved ones, your assets and your wishes for the future.

Every adult should have an estate plan, especially those with young children or significant assets. Call 209-485-9257 or contact us online to schedule an appointment to discuss your estate planning concerns.

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A complete estate plan might include a last will and testament, financial and health care powers of attorney, advance health care directive, guardianship designations and community property agreements. At the law office of Ronald W. Hillberg, we will listen to you and draft the documents you need to accomplish your goals.

Estate planning is one of those things that is easy to put off for another day. But the days become weeks and the weeks become years. Unfortunately, many people wait to create an estate plan until it is too late to accomplish all of their goals.

Call 209-485-9257 or contact us online to schedule an appointment with the law office of Ronald W. Hillberg. We will tailor our estate planning services to meet your unique needs.

An important goal of estate planning is to protect income and assets from creditors’ claims and tax collection. While many people think asset protection involves shady or dishonest techniques, there are many ways to protect financial reserves, personal property, real estate and other assets for retirement or for future generations. In addition to federal and state laws that exempt certain types of property from creditors’ claims, taxation or both, there are numerous estate planning tools that may be able to shield assets from future creditors and reduce or eliminate estate or income taxation. If you are interested in working with an estate planning attorney to create a plan to protect your assets, contact Ronald W. Hillberg in Turlock, California, today to schedule a consultation.

Family Limited Partnerships and Asset Protection

A family limited partnership (FLP) can be one of the most valuable asset protection strategies for a family whose members want to preserve their assets while retaining control over them. FLPs are set up much like traditional limited partnerships with "general partners" (frequently parents) and "limited partners" (usually the children). General partners manage the partnership’s assets, make investment decisions, share in the FLP’s income and are responsible for the FLP’s debts. Limited partners have an ownership interest in the FLP and share in income generated by the FLP, but they have little or no control over the FLP’s activities and are responsible for the FLP’s debts only to the extent of her or his ownership interest.

FLPs are designed to reduce estate and gift taxes by taking advantage of valuation discounts, the annual gift tax exclusion and the unified credit.

Valuation Discounts. Because interests in FLPs are generally not marketable (that is, interests in FLPs cannot be converted easily to cash at a known market price), a discount for lack of marketability (DLOM) is typically appropriate, and a DLOM often significantly reduces an FLP’s value for estate tax purposes. A minority discount may also be available to reduce the valuation of an FLP interest given to a limited partner who has only a noncontrolling interest in the FLP.
Annual Gift Tax Exclusion and Unified Credit. Under the annual gift tax exclusion, gifts of an individual’s FLP interests up to a certain dollar amount, to different recipients and within the same year are exempt from the federal gift tax. Similarly, under the unified estate-and-gift tax credit (also called the unified credit or applicable exclusion), estates are exempt from the federal transfer tax up to a certain dollar amount.

Because valuation discounts reduce an FLP's estate and gift tax value, the benefits of the annual gift tax exclusion and the unified credit are greater for assets transferred through the FLP than for assets transferred outside the FLP.

Shielding Assets from Creditors

A properly structured FLP or other limited liability entity may also provide protection from creditors; however, there are limitations with respect to the extent of asset protection that this type of planning can provide. These limitations vary by state and by type of entity.

For many years, shifting ownership of assets to a spouse whose risk of liability is less than that of the other was a commonly-employed asset protection technique. Subject to the laws against transfers for the purpose of committing fraud, assets owned by a spouse are not usually available to satisfy a judgment or order against the other spouse.

A creditor that wants to sue a person who has placed his or her assets into a trust, a foundation, or other entity may find that there are very few assets actually owned by the person they wish to sue. Assets owned by a trust, foundation, or similar entity are generally not subject to claims against its beneficiaries. In addition, placing assets into an asset protection entity can remove those assets from a person’s estate tax estate.

Conclusion

Taking steps to protect your assets from creditors’ claims, the availability of valuation discounts to reduce the estate or gift tax value of your FLP and strategic use of the annual gift tax exclusion and the unified credit can result in significant preservation of your assets. If you have questions about asset protection or other estate planning objectives, contact Ronald W. Hillberg in Turlock, California, to schedule a consultation with an estate planning lawyer.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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