Everything you own in Indiana, including your personal possessions, furniture, life insurance, home, car, investments, savings accounts and other assets, are at risk of high taxation, poor distribution and harsh creditors without proper planning. Therefore, it is important that you protect your estate for the people you love and also to control the distribution of this property to avoid paying high taxes or wasting your hard-earned assets. Here’s how.
Estate planning and asset protection
Estate planning is a way of determining how your property will be cared for and protected when you can no longer do it yourself. This could be when you are incapacitated or dead. Asset protection is a plan to proactively protect your assets once you have established your estate planning goals.
How to protect your assets
You may want to set up an irrevocable trust for your beneficiaries. An irrevocable trust will minimize estate taxes, protect your property and assets from your creditors, helps protect your beneficiaries from making poor financial decisions, and help them stay eligible for government programs like Medicaid and Supplemental Security Income. The only issue with establishing a trust is that you are legally removing all of your asset ownership rights and transferring them into a trust.
You could also transfer your assets into a limited liability company. Your creditors will have limited rights to gain access to your assets if you transfer them into an LLC once you establish a new business entity that’s legally separate for you, the owner. Note that if the LLC can’t pay its debts, your creditors can’t come after your personal assets like your home, cars or bank accounts; instead, they will go after LLC’s bank account and assets.
In addition, it may be part of your estate plan to gift your beneficiaries some of your assets while you’re still alive. Indiana does not levy a gift tax; however, the federal government will tax your gifts if they exceed a certain limit, which is $15,000.
Start your estate planning process as early as possible to protect you and your loved ones from lawsuits, high taxes and creditors. You can use your estate plan to protect your assets while you’re still living as well as after you’re gone.