ASSET PROTECTION STRATEGIES FOR CALIFORNIA RESIDENTS
July 12, 2016
California residents who do not wish to see the property that they have toiled tirelessly to amass lost to creditors or litigants may wish to consider asset protection strategies that go beyond the types of trusts that typically appear in estate plans. Usually careful drivers who take their eyes off the road ahead for just a few seconds can find themselves being ordered to pay compensation of six figures or more if their moment of distraction led to a serious accident, and even individuals who generally enjoy robust good health can become burdened with unmanageable medical bills after becoming ill or getting injured.
The realities of modern life have made asset protection strategies no longer the purview of only the wealthy, but those who hope to keep their homes or other assets out of the reach of creditors will likely need to go beyond estate planning tools like revocable living trusts. The chief benefits of trusts are that they are flexible and avoid probate, but they provide no real deterrent to litigants or creditors.
Tenancies by the entirety, which allow married couples to both own 100 percent or real and sometimes personal property, are a straightforward and inexpensive form of asset protection, but residents of states like California that do not recognize this type of concurrent property ownership must look into other options. Liability coverage from a home, business or auto insurance company is a popular choice, and annual premiums generally cost about $300 for every million dollars of protection.
While trusts may not do a good job of protecting assets from creditors, they do provide people with a great deal of control over how their assets will be distributed and they allow estates to be administered privately. Attorneys with experience in this area may suggest that trusts form part of a comprehensive asset protection and estate planning strategy that also features liability insurance and powers of attorney.