As you work on your estate plan, one of the most important things to do is to look into how you can preserve your assets. You have a number of options that will help you do so. Some include sending your life insurance into a trust, setting up an irrevocable trust during your lifetime and using strategic gifting.
These three options help you protect your assets in different ways. Here’s what you should know about using these asset protection measures.
- Paying life insurance into a trust
One way to help preserve your life insurance for a beneficiary is to have that life insurance sent to a trust. For example, you may have it sent to a trust for your child and set requirements such as that they need to be 18 before collecting or that they must be married before they can access the funds.
This could help you protect the benefits from being spent too quickly and limit access until your child is old enough to understand how to use that money effectively.
- Setting up an irrevocable trust
The next thing to consider is setting up an irrevocable trust. With an irrevocable trust in place, you can help protect your assets against collections activity or the Medicaid spend down requirements in most cases.
- Using strategic gifting
Another way to protect your assets is by giving them away strategically during your lifetime. For example, if you would like to spend down your accounts, you may want to pay the maximum gift to each of your beneficiaries for several years. As long as you meet the tax requirements, you may avoid taxes on those gifts, too, so that you preserve more of your financial assets over time.
Start estate planning to protect your assets and interests
These are three ways to help protect your assets with the use of estate planning. Paying life insurance into a trust, setting up an irrevocable trust and using strategic gifting can all help you make the most out of your assets and preserve them for the people who you will leave behind in the future.