What Is the Difference between Asset Protection and Estate Planning?

Virginia residents who would like to protect their property often use two different channels to accomplish this goal: asset protection and estate planning. Asset protection seeks to find ways to protect assets in a proactive manner while estate planning is more focused on how assets are treated after a person’s demise.

Asset protection strategies seek ways to protect assets from being absorbed or taken by others. They protect individuals from creditors as well as the pitfalls of divorce. For example, a prenuptial agreement can stipulate that certain business interests belong to the specific spouse and are not subject to division if the marriage ends. Trusts may be established in such a way that creditors or litigants cannot try to take the assets held in them. Additionally, plans can be made to protect a family home, business interest, money or other assets from being taken by the government if an individual later needs to depend on the government for support or medical services.

An estate plan includes plans for the end of a person’s life. One cornerstone of an estate plan is the creation of a Last Will and Testament. This document lays out the final wishes of a person regarding how he or she wants property that he or she owns at death divided. The will also includes instructions on how to handle debts and names someone as the personal presentative who can follow these instructions. Many individuals also incorporate trusts into their estate plan. A trust provides specific instructions regarding how assets or income should be used and appoints someone to take care of these funds, called a trustee. There are a number of different types of trusts, including special needs trusts, inter vivos trusts, generation skipping trusts and charitable trusts. An estate planning lawyer can help determine which type of trust will be able to best address a person’s needs and desires.

While an estate plan can help determine property rights after a person passes, it may also encompass a series of other arrangements. For example, a comprehensive estate plan often provides for a power of attorney. This appointment allows a person to give someone else the right to act on his or her behalf regarding financial transactions. The individual can make the powers as narrow or broad as he or she wants. This power can go into effect immediately or spring up at a specific point in time such as a future date or at a time when the person becomes incapacitated. For the power of attorney to remain effective upon incapacitation, it must be made durable. An estate plan may also encompass the right for another person to serve as a proxy when making important medical conditions about the individual or provide advance directives.

While some of the strategies used for asset protection and estate planning may be similar, the focus of asset protection is on the living while the focus for estate planning is for the dead. By thoroughly considering asset protection and estate planning strategies, individuals can protect assets now and later.

The Northern Virginia asset protection lawyers at Altman & Associates have the knowledge and experience you need to make sound estate planning decisions. Schedule a consultation by calling us at (301) 468-3220 or contact us online to meet with us in our convenient location in Northern Virginia.

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