Asset Protection

Creating an Estate Planning Asset Protection Strategy

October 9, 2023
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8 min read

The more money you earn, the more important it is to have an estate plan in place in the event of your passing away. The last thing you want is for your wealth to be scattered indiscriminately to different family members or institutions. By setting up an estate plan, you can ensure that the right people receive what you want after you’re gone.

However, many people consider estate planning to be a core part of asset protection or vice versa. Because of this, they try to create an estate planning asset protection strategy as if the two approaches are equal or interchangeable. In reality, estate planning and asset protection are related in some ways, but distinct in others.

Let’s take a closer look at how you should use asset protection for your estate planning strategy in the long term.

Estate Planning and Asset Protection – Not the Same Things

Before we continue, we’ll clear up some basic definitions. Whether you’re an entrepreneur with millions of dollars to protect after unprecedented business growth or a retiree looking to fortify your estate for long after your death, it’s vital to grasp the differences between estate planning and asset protection.

Estate Planning

In its simplest form, estate planning is drawing up a will and making sure it’s legally binding. More complex estate planning strategies can include the formation of trusts and other asset vehicles, which can ensure the management and distribution of estate assets long after the original trust settlor passes away.

But no matter its form, estate planning is always about planning for the management and eventual distribution of estate assets, such as money, property, etc. It’s not about defending those assets against potential creditors or other legal threats (in most cases).

Asset Protection

Asset protection, on the other hand, is about protecting assets against potential legal attacks, such as a lawsuit, a debt creditor coming to collect, etc. For example, you might set up an asset protection trust or “APT” to ensure that the majority of your wealth can’t be taken in the event of an unlucky lawsuit.

But wait, you might ask – isn’t it crucial to protect your assets so you can use them for estate planning? You’re right! But it’s also true that you don’t really need to think about estate planning when it comes to asset protection, at least at the same time.

In other words, asset protection might be a part of estate planning, but not the reverse.

Do You Need to Do Both at the Same Time?

Not at all. In fact, it’s oftentimes good to keep estate planning flexible and dynamic as you live life and your situation evolves.

You do not need, for example, to set up an asset protection trust and a very comprehensive estate planning strategy in the prime of your life at 35. 

At this stage, when your business is growing and your entrepreneurial coffers are filling with more and more cash, protecting your assets is much more important than worrying about which of your grandchildren (who don’t yet exist) will receive funds when you die.

It's never a bad idea to have at least a will locked in your safe or otherwise retrievable by legal officers if you meet an untimely demise, of course. But don't assume that, simply because you've begun the preliminary steps to create an asset protection trust, you also need to think about estate planning and set up separate trust vehicles for that purpose as well.

You can. But make sure your priorities are straight. Your estate planning efforts won’t matter if you don’t get your asset protection strategy in place at the earliest opportunity.

Leveraging Asset Protection Within Estate Planning – Two Strategies for Two Different Periods of Life

When it comes to making an estate planning asset protection strategy, the best way to tackle both tasks is to implement asset protection into your estate plan. Depending on where you are in your life, this can take two different forms.

Setting Up Asset Protection with the Goal of Long-Term Wealth Generation

First, if you are relatively young or middle-aged, you shouldn’t expect to die anytime soon. Because of this, asset protection takes a greater priority, and you should set up an asset protection plan as soon as you can.

But it won’t hurt to consider estate planning in a very broad, future-focused sense. To maximize your future estate planning success, have your legal experts, like the advisors at Dominion, set up an asset protection plan with a focus on future wealth generation.

For instance, you might not set up an asset protection trust purely with the goal of securing your assets against legal attacks (though this will certainly be a prime concern). You’ll also set up an asset protection trust in a jurisdiction or in a certain format such that your money continues to work for you over the coming decades.

By the time you are ready to look more seriously at estate planning, your asset protection strategy will have contributed to your options. In theory, your asset protection trust will have generated more wealth, which you can then use for your future beneficiaries.

Devising an Estate Plan While Taking Asset Protection Into Account

On the other hand, if you’re already older and retired, and estate planning takes up more of your time and thought, it’s a good idea to keep asset protection in mind when formulating the right strategy based on your intended goals and your beneficiaries.

Remember, asset protection is not estate planning whatsoever. If you pass away without an estate plan in place, the asset protection trust(s) you set up previously won’t implement any advanced changes. The trustee for your asset protection trust will simply follow whatever your will states.

As you develop your estate plan, consider things like:

  • Whether you want the asset protection trust you currently use to remain in place for your beneficiaries. If you play your cards right, any asset protection trusts already established should have created a good amount of wealth that your new estate strategy can take advantage of and incorporate into the money you plan to give to beneficiaries
  • How you want to change your asset protection trusts now that you may no longer need them for several more years
  • Whether you should set up a new asset protection trust for each beneficiary
  • And so on

By incorporating asset protection trust into your estate planning, you can make sure that the assets and wealth your beneficiaries receive will remain secure. After you pass away, your wealth could be temporarily vulnerable to creditors or other legal attacks if you aren't careful. 

Keeping asset protection at the forefront of your mind will minimize the likelihood of any financial tragedy striking your beneficiaries.

Maximizing Your Long-Term Estate Planning with Dominion

This is a highly complex topic, and both asset protection and estate planning require a lot of time and effort to craft custom-tailored plans perfect for your needs and your future goals. Because of this, it’s a good idea to get in touch with the experts at Dominion right away.

At Dominion, we'll help you set up the right asset protection trust you need to ensure that your wealth is secure and effective, not just now but in perpetuity. Our legal advisors and financial specialists can get to work:

  • Finding the right jurisdiction for your asset protection trust
  • Drafting the paperwork
  • Exploring further investment options for wealth growth
  • And much more

It all starts when you get in touch with one of our representatives, so contact us today.


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