Key Exemptions – California opted out of the default federal exemptions for debtors & instead utilizes its own state law exemptions.
Health Savings Accounts
529 Education Funds
Retirement Plans & IRAs
Before considering advanced asset protection vehicles, it is often advised to afore focus on exemptions, revocable trusts, & insurance.
first, consider which existing assets are exempt?
Second, determine what exemptions can still be maximized?
In addition, insurance is another important way to protect assets.
Not a piece of paper or property; trusts are a relationship that can be created by a writing, agreement, or involuntarily such as with a constructive trust.
Estate Planning Trusts
In the context of estate planning, trusts come in two forms: irrevocable & revocable
Revocable trusts generally are used to avoid probate, or to keep assets separated (for example, to avoid commingling with marital assets). They are highly flexible, inexpensive & generally do not have major tax consequences other than with respect to estate taxes.
Irrevocable Trusts are much more effective for asset protection & preserving entitlement to government benefits than revocable trusts. But they carry major tax consequences, which can be good if prepared & maintained carefully or disastrous if mishandled.
Advanced Asset Protection
Asset Protection Trusts
Domestic v Foreign Trusts & Entities
Indemnity Plans versus Reimbursement Plans
Proposed “For the 99%” Act
The proposed “For the 99% Act” if enacted would result in significant changes concerning estate & gift tax exemptions & estate tax rates. Certain advanced tax reduction trusts including Generation-Skipping Trusts & Grantor Retained Annuity Trusts would receive significantly worse treatment. Valuation discounts for closely held businesses are proposed to be significantly reduced & the entire value of Grantor Trusts are proposed to be included in a decedent’s taxable trust.
Under American law, to succeed as such, Asset Protection Trusts need to be irrevocable & contain a spendthrift clause.
Efforts by the Settlor to retain control or limit the discretion of the trustee may cause the Trust to fail to protect assets; however settlors may appoint protectors & investment advisors.