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Who Needs to Include Asset Protection in Their Estate Plan?

While the primary focus of your estate plan may be the creations of a road map to be used to distribute your estate assets following your death, a well thought out estate plan can – and should – accomplish far more than just that. A comprehensive estate plan should incorporate several additional goals and objectives, such as incapacity planning, probate avoidance, and/or Medicaid planning. Another common addition found in many estate plans is asset protection. Who needs to include asset protection in their estate plan though? Do not make the common mistake of assuming that you need to have a large and valuable estate in order to benefit from the inclusion of assets protection strategies in your estate plan because even a modest estate can benefit from an asset protection component. Whether your assets are worth $50 million or $50,000, you undoubtedly do not want them at risk.

What Are the Threats to your Assets?

Like many people, you may not realize all of the potential threats to your assets. The reality is that even if you are careful with your money, prudent with investments, and wise when it comes to expenditures, your assets could still be at risk because of the actions of others. Consider some of the most common threats to your assets:


  • Creditors — One of the biggest threats to your assets comes from your own creditors or creditors of loved ones. Regardless of how fiscally responsible you may be, your assets could be at risk from your creditors as a result of circumstances out of your control, such as economic downturn, a business failure, or your own incapacity. In addition, if you co-sign a loan for a spouse, child, parent, or other loved one, your assets could be at risk if the primary borrower defaults on the loan.
  • Your Divorce – North Carolina is an “equitable division” state when it comes to the divisions of assets and debts in a divorce. This does not mean your assets are safe in a divorce. First, “equitable” does not always mean equal. It means fair. Fair might mean your spouse gets more than half of the marital assets.  Non-marital assets should be safe; however, people frequently co-mingle non-marital assets without even realizing it. That, in turn, puts those assets at risk in a divorce.
  • Divorce of a Child (or other beneficiary) – How can your child’s divorce threaten your assets? Most often this occurs when you gift assets to a married adult child and then that child goes through a divorce. Those assets could end up in your (now ex) son-in-law’s or daughter-in-law’s hands. There are ways to protect assets you gift to a beneficiary as part of an inheritance; however, if steps are not taken to protect the gifted assets they will potentially remain vulnerable.
  • Long-term Care Costs – you may have never given Medicaid eligibility a second thought. In your retirement years, however, you and/or your spouse may need long-term care. The longer you live, the better the odds of needing long-term care. At an average yearly cost of over $80,000 nationwide, your hard-earned assets could be at risk unless you can qualify for Medicaid benefits which do cover long-term care costs. Medicaid, however, will expect you to expend a significant portion of your hard-earned assets if the value of those assets exceeds the program’s assets limit – a limit that is as low as $2,000. A specialized type of asset protection planning known as “Medicaid planning” can help protect your assets and ensure that you qualify for benefits when the time comes that you need them.
  • Spendthrift Beneficiaries – you may prefer not to think about him/her, but families have one – that one family member who simply cannot be trusted with money? He/she might have an addiction problem or simply be unable to manage money. Regardless of the reason why the individual cannot be trusted with money, gifting assets outright to a spendthrift beneficiary is never a good idea. The solution can be found in asset protection strategies that allow you to provide for your loved one without putting your hard earned money at risk.


As you can see, almost anyone can benefit from the inclusion of asset protection tools and strategies in their estate plan. Whether you are protecting a modest estate or a large fortune it is worth protecting.

Contact Us

If you have additional questions about asset protection planning in the State of North Carolina contact the experienced estate planning attorneys at The Law Offices of Cheryl David by calling 336-547-9999 to schedule an appointment.

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