While we routinely provide Estate Planning Legal Advice to those in Santa Fe, Albuquerque and the surrounding areas of New Mexico, the concerns expressed by client cover many issues because estate planning affects so many aspects of our lives. While healthy individuals in their twenties or thirties may assume that they have little to gain from estate planning, there are many estate planning issues that impact younger adults. An important benefit provided by many forms of estate planning is the ability to shield your accumulated wealth from creditors. Depending on the asset protection tool employed, there are strategies for protecting assets from your creditors, the creditors of your loved ones or both. We have provided an overview of some of these estate planning strategies below:
Protection of Professional Businesses/Business Assets
If you have a professional practice like a legal practice, medical practice, accounting firm, a professional limited liability company (PLLC) or a Professional Corporation (PC) may be set up to limit your personal liability if your professional practice is involved in litigation. Because anyone engaged in providing professional services faces the potential risk of a lawsuit, it is important to discuss asset protection with a New Mexico Estate Planning Attorney. The PC or PLLC can be set up so that it holds minimal assets. Real property or business equipment may be held in separate limited liability company (LLC) which can lease the assets for use back to the PC or PLLC providing another level of asset protection.
Safeguarding Other Forms of Business Assets
If you have a family business that does not involve a professional practice, you may want to seek the counsel of an estate planning attorney about establishing a family limited liability company (FLLC) or family limited partnership (FLP).
Strategies for Shielding Non-Business Assets
Another approach to protecting assets may include establishing a foreign asset protection trust (FAPT). When you place assets in this type of trust, the assets become shielded from reach by creditors once those assets are delivered to the offshore custodian of the assets. Some countries where this is possible do not recognize judgments by courts in the U.S. making it very difficult on creditors who must litigate such claims in the foreign jurisdiction (e.g. Cook Islands). While you may also be able to set up a Domestic Asset Protection Trust (DAPT), which are recognized in a growing number of states, New Mexico has not yet recognized this asset protection tool. In states that recognize this type of asset protection device, you can set up a self-settled trust that may include any type of asset. If no claim is made against the assets in the trust for a two year period, they become protected from future creditor claims. DAPTs vary from state to state so you should discuss this option with your estate planning attorney if you are considering using this strategy.
General Estate Planning Debt Protection Strategies
Generally, the features of your estate plan including a living trust can be constructed to ensure that your assets are not put at risk because of predators that prey on those with special needs, former spouses and judgment creditors.
The above information is provided to illustrate general principles of law and should not be interpreted as a specific legal opinion on an individual case. You should contact experienced legal counsel to get specific legal advice that is based upon your specific circumstances.
The New Mexico estate planning law firm of Jay Goodman & Associates, PC offers a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your options. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights and options.
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