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Protection from creditors is important part of estate planning

Planning a California estate does not only include dealing with how assets are distributed after one's death. Estate planning also includes managing assets while living. For those with a significant amount of wealth, it is important to protect assets from creditors as well as other potential risks.

Each individual situation is unique, and a careful evaluation will be necessary to develop the correct asset protection plan. Some people who have low risk of facing a claim may decide that just having insurance and declaring a homestead is enough to protect one's home. Others may wish to create an offshore trust or separate business entity for certain assets. Of course, no plan for protecting assets is perfect and one may have to adjust strategies as circumstances warrant, including changes in applicable laws.

Many times, a person may decide to divide one's assets with a spouse. This may be a good idea if one has greater exposure to possible liabilities than the spouse due to that person's business or occupation. This individual may wish to maintain ownership of income and business assets while the spouse takes ownership of investments and other assets of value. Typically, creditors can only reach assets in a debtor's name.

While creating an asset protection plan while still alive is important, it is also essential to consider how assets will be administered after one's death in California. Failure to do so can cause intended beneficiaries significant problems. This will require relying upon someone with knowledge of applicable estate planning laws and the experience to apply this knowledge to one's specific situation and estate planning goals.

Source: thespectrum.com, "Asset protection in estate planning", Brent Shakespeare, April 2, 2015

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