Estate planning is all about asset protection. You’ve worked hard for the things that you have, so it’s natural to want to pass your legacy along to your heirs. However, you could be leaving your heirs with nothing if you don’t take steps to protect your estate against lawsuits — which can continue even past your death.
Most people don’t think about lawsuits when they’re making their estate plans — but almost everyone is vulnerable. If you’re a business owner, for example, a lawsuit focused against your business could leave your personal assets exposed — unless your business is formed in such a way that your private assets are protected.
If you’re not a business owner, there’s always the possibility that you could be blamed for an accident that injured someone at the moment of your death. For example, imagine that you’re killed in a car accident. If someone else is injured or killed, you could be blamed, fairly or unfairly. A lawsuit against your estate could leave your heirs in financial limbo for years and, eventually, out of luck. Any money or property you had hoped to leave behind could be seized to satisfy a judgment that’s greater than what your insurance will pay.
There are numerous ways to protect an estate and personal assets from lawsuits and other creditors. If you own a business, you can form a limited partnership or a limited liability company to protect your personal wealth. An irrevocable trust can be used by anyone to hold assets that they want to be sure will survive a judgment in a lawsuit or the clutches of their creditors. There are also offshore asset protection trusts that are perfectly legal to use.
The ultimate goal of estate planning is to protect yourself and your heirs from economic disaster. However, if you’re not thinking about what a lawsuit could do to your legacy, you’re still overlooking something important when it comes to estate planning.