What are personal assets?

You probably have some inkling of what qualifies as an asset, namely property, heirloom furniture, art, jewelry, and other valuables. These are all physical assets. Most people also have financial assets, including savings accounts, stocks and bonds, retirement accounts, and even life insurance. Basically, anything you own having monetary value falls under the category of personal assets. Regardless of how much or little you have, you want to make sure your assets are protected and passed along to your loved ones some day. But how should you engage in asset protection planning? The key principle at play here is if you personally do not own the asset, someone can not take if from you.

What are the options?

The place to start is by understanding your options for asset protection. There are two main types to consider: wills and trusts. You've no doubt heard of a last will and testament and you are likely familiar with how it works.

A will transfers your assets after you have passed away

You simply fill out these documents, stating which of your assets you'd like to pass along to named beneficiaries. Then you make sure it is properly notarized and you leave it in place (or change it as you see fit) until the time of your death, when your assets will be distributed according to the directives in your will.

Unfortunately, wills have to go through the probate process, during which creditors can come out of the woodwork to lay claim to assets they feel can be used to pay off your outstanding debts. At the very least, probate can be a lengthy process, leaving your loved ones with mountains of bills and no idea when (or if) they'll gain access to your estate. So, let's look at option two.

A trust transfers your assets while you are alive, here and living

Family trusts perform a similar function as wills, granting your assets to beneficiaries but this is done during your lifetime. When you form a trust, the assets are held in trust for the named beneficiaries. You can continue to use them if you are a beneficiary, but you're like a custodian (the trustee) you don't actually own them anymore - the trust does. This is where the protection is achieved.

Gaining asset protection during your lifetime

So if you set up a family home trust, for example, you no longer own your home. It is held for your loved ones until the time designated for it to be passed on (say, at the time of your death). This means that outside parties cannot claim it to pay your debts. And further, beneficiaries will have immediate access - without having to wait for probate. Asset protection planning is an important part of passing on wealth and other valuables to loved ones, so it's important to understand your options and select the ones that are right for you, your family, and your estate.

So why not learn more and register with TrustUs today.

After all, it's in your hands.