Estate planning is synonymous with creating a will for many people. Some estate plans do only include one document, and people can achieve numerous crucial goals with just a will. They can name a guardian for their minor children and arrange for the descent of their most valuable resources.
However, many estate plans include numerous other documents in addition to a will. Those who integrate other forms of planning into the estate planning process may decide to add trusts, powers of attorney and other documents to their estate plan better protect themselves.
Those concerned about whether they will have sufficient resources to remain financially independent during their retirement could benefit from engaging in asset protection planning in addition to basic estate planning. What are the benefits of asset protection planning as you prepare for retirement?
1. You protect your financial stability in your golden years
All it might take is a car crash or some emergency medical situation for your household to end up struggling to pay the bills. Despite years of carefully preparing for retirement, you could end up without sufficient resources to cover your cost of living expenses and at risk of a lawsuit.
Your creditors could potentially take you to court and lay claim to your property. Asset protection planning will reduce the likelihood of your most valuable asset being vulnerable to creditor claims as you age.
2. You can protect your legacy after you’re gone
Maybe you will end up in a nursing home and will depend on Medicaid to pay your costs. Perhaps you incur thousands of dollars in medical debt and the days leading up to your death. Individual creditors can bring debt-related claims against your estate.
In fact, even Medicaid can make a claim claim against your property after you die. The Medicaid estate recovery program allows the state to request your financial resources or even the home where you live prior to your death to repay the benefits you received. If you don’t plan ahead of time to protect your assets, you may not have anything to pass on to your children or other loved ones as an inheritance after you die.
Taking the proper asset protection steps as you plan your estate can help you minimize the risk of aggressive collection activity and other situations that make derail your retirement plans or legacy wishes.