How Can I Create an Estate Plan That Protects My Assets From Creditors?

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Wills and Trusts

When you are crafting your estate plan, you are making a decision about what you want to leave behind for those you hold most dear. However, if your creditors have anything to say about it, your loved ones may never receive the assets you leave for them. Fortunately, there are steps you can take now to ensure that your estate plan is creditor-proof.

Tips for Making a Creditor-Proof Estate Plan

The American Association of Retired Persons (AARP) published an article on their website explaining what steps people can take to make their estate plan creditor-proof. Per the AARP report, here are a few options you can explore to ensure your heirs and not your creditors receive the assets you leave behind after your death:

  • You can establish a trust – Create a trust instead of a will to leave money behind for your beneficiaries. Unlike a will, a trust can specify what the money is to be used for, such as education or living expenses for a specific beneficiary, like your spouse or children. If the money can only be used for those purposes, then creditors cannot gain access to it.
  • Properly handle retirement accounts – If you leave the money from an IRA to a loved one, creditors can gain access to it if your family member ends up in bankruptcy court. However, if you leave the money to your beneficiary through an IRA trust, it will prevent your creditors from coming after it even if your loved one files for bankruptcy.
  • Add your heirs as beneficiaries on your bank accounts – Creditors cannot go after bank accounts that you name beneficiaries on. The money from those accounts will go to your beneficiaries instead of your creditors after you die.

The San Jose and Danville attorneys at Temmerman, Cilley & Kohlmann, LLP have been focusing exclusively on trust and estate law for over 15 years. If you have questions about a trust or estate law matter, give us a call and schedule a free 30-minute initial consultation with one of our attorneys today.