By Scott Berryman of Legacy Design Strategies
Whenever I counsel physicians and families about transferring and protecting their assets in an estate plan, we always talk about a few other items that tend to be appropriate in helping them manage taxes and risk.
First, I ask them if they have long-term care insurance. If they say yes, I know they have had a conversation with a financial professional. If they say no, I encourage that conversation. We are lawyers and don’t have an opinion on long-term care insurance, only that a well-considered decision should be made.
Second, I ask about an umbrella insurance policy. Many have them; many don’t. Most policy limits are too low. In the context of creating an estate plan, we analyze all assets for proper titling and applicability for estate taxes. More often than not, it is pretty easy to look at the grand total at the bottom of the page and make the case for more liability insurance. Another good reason to have a conversation with your financial advisor!
Third, titling vehicles. Usually, adult children have fewer assets to lose than their mid- to late-career parents. If your 22-year-old son or daughter has an accident in a car titled in your name, you are needlessly placing your assets at risk. After they have reached the age of majority, there are few reasons to have the vehicle they drive counted as your liability.
Fourth, irrevocable trusts. An irrevocable life insurance trust (ILIT) may help your estate tax situation, and premiums that go into the trust for the benefit of others become assets safe from creditors. A spousal gifting trust (SGT) allows for annual gifting between married persons into irrevocable trusts for the benefit of the spouse and possibly children, thereby sheltering the gifted assets from creditors.
Likewise, other forms of gifting protect assets from your creditors. What you don’t own can’t be taken. Federal tax law sets annual caps on tax-free gifts that can be given to family members as a tax-efficient method of transferring assets within a family. And don’t forget charity! Giving to your favorite non-profit can give you an immediate tax benefit and move assets away from unforeseen future liabilities.
Finally, at the most sophisticated and powerful end of asset protection, there are foreign and domestic asset protection trusts, as well as hybrids of the two. Using the differing legal structures of various states and foreign countries, we are able to create vehicles that can provide the strongest level of asset protection.
About the Author: Scott Berryman is an estate planning and asset protection attorney married to a physician. He works at Legacy Design Strategies, a boutique law firm dedicated to estate and business planning, transfer and protection across seven midwestern states. Scott works almost exclusively with medical professionals and their unique needs in considering risk in addition to their estate plans. He can be reached at Scott@LDStrategies.com.
PLEASE NOTE LIMITATIONS: Please see Important Disclosure Information and the limitations of any ranking/recognitions, at www.fostergrp.com/info-disclosure/. A copy of our current written disclosure statement as set forth on Part 2A of Form ADV is available at www.adviserinfo.sec.gov.