With tax season upon us, it’s the perfect time to put your financial affairs in order. The struggle to do so is real. U.S. household debt, including student debt, credit card debt, auto debt, mortgages, home equity loans, and other debts, exceeds $14 trillion. And, according to a recent survey, 40 percent of respondents indicated they would struggle to meet current financial obligations if something delayed their next paycheck for one week. What’s more, another 34 percent said that a delay in their paycheck would pose serious issues. The COVID-19 pandemic added to this difficulty, creating scary financial reality for millions of Americans.
Financial Struggles
Whether or not you struggle financially, make a realistic assessment of your financial situation. Consider whether you and your family feel prepared for the future. Creating or updating your estate plan allows you to exercise control over your finances. It also offers substantial peace of mind and security for you and your family.
Take an Inventory
An important first step for creating an estate plan? Take an inventory of your money and property. Regardless of your wealth or financial struggles, everything you own is part of your estate and should be listed–or at least accounted for– in your inventory.
Include the Following:
- The value of all of your real estate, including your home
- Tangible personal property, i.e., cars, heirlooms, artwork, jewelry, furniture, etc.
- All accounts (e.g., bank, investment, retirement accounts) and their balances, using the most recent statements
- The contents of all safety deposit boxes (and their location)
- The cash value and death benefits of all insurance policies
- All liabilities, i.e., mortgages, lines of credit, notes, other debts
- All business interests
Protect Your Assets
Transfer money and property to preserve for beneficiaries into an irrevocable trust. Such a trust offers protection against amendments, modifications or revocation. This document protects those assets from future creditors or judgments (with time limits). Because the money and property used to fund the trust which no longer belongs to you, so you lose control. This could render you unable to pay your creditors. Name your family members and loved ones as the beneficiaries of the trust. This strategy helps individuals working in professions which are at a high risk of lawsuits, e.g., doctors, lawyers, etc.
Warning: An irrevocable trust will not prevent creditors from submitting a claim at trust’s inception. Thus, courts often rescind transfers to trusts if they were made with the intention of defrauding current creditors.
Consider Beneficiary Needs
Protect your loved one’s inheritance from creditors. Even if you protect beneficiaries so they receive a nice nest egg when you pass away, this could disappear once they claim it. That is, unless your estate planning attorney designs the trust to avoid this possibility. Therefore, you can create a trust with terms to protect your beneficiaries’ inheritance. So, this avoids claims arising from their creditors, divorcing spouses, or lawsuits. A variety of different types of trusts protect the money and property from such claims.
About Skvarna Law in Glendora and Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. We provide legal services. We cover San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes several cities. Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
