Do you own a home or business? Do you want to protect those assets, but aren’t quite sure how? Many have at least heard of a will or trust but confuse the differences between the two when managing assets.
Our office has prepared countless asset protection and estate plans for various individuals and families. However, we have also seen some catastrophes when clients attempted to manage assets without the assistance of legal advice. One prior client attempted to pass on his business assets without any legal services and ended up being swindled out of his fortune due to a botched transfer of his assets. This unfortunate disaster could have been avoided with the proper asset protection and estate protection tools, including but not limited to the more common ones: trusts, wills, LLCs, and a properly structured plan.
Trusts allow you to manage assets inter vivos or during your lifetime. You must designate a trustee to oversee the trust, transfer your assets to the trust, and decide whether your trust will be revocable or irrevocable. A revocable trust can be revoked or amended, but is subject to the claims of creditors during your lifetime.[1] An irrevocable trust cannot be amended, and is subject to the claims of creditors only to the extent any amount can be distributed to you or for your benefit; otherwise, it is off limits to creditors.[2] Irrevocable trusts can be especially valuable for liability purposes, because the trust owns the assets and the trustee disposes of the proceeds according to your wishes. Hence, a creditor would not be able to liquidate assets you put in a trust, the proceeds of which are directed to someone other than yourself, since you no longer own the assets disposed of within the trust.
Wills allow you to pass on assets to designated beneficiaries after your lifetime, meaning your wishes take effect upon your demise. You simply designate a personal representative, who must be a Florida resident, unless related by lineal consanguinity, to carry out your wishes upon your demise with respect to your assets owned at the time.[3] You may change your will as many times as you wish before your demise; nothing in your will is permanent until you pass away. In Florida, if you do not have a will upon your demise, then the state will determine how your assets are distributed.
Limited liability companies or LLCs can be effective in organizing your assets while distancing yourself from various liabilities. LLCs can own many different assets such as real estate, stock, self-directed retirement plans, vehicles, and other assets. Assets owned by your LLC would circumscribe the extent of creditors’ claims against that entity only and not your personal assets. Furthermore, you can put your various LLCs into a trust or dispose of them in your will, making transfer processes smoother. These are just some of the strategies our law firm can implement for you and your family.
As always, you want to seek the advice of legal counsel before executing any estate documents. If you or your loved ones have questions regarding how to protect your assets, you could obtain a complimentary consultation with our office. Our team of dedicated professionals is standing by to assist you.
[1] Fla. Stat. §§ 736.0505(1)(a), 736.0602(1).
[2] Fla. Stat. § 736.0505(1)(b)
[3] See, Fla. Stat. §§ 733.302, 733.304.
