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Law Offices of Amy R. Turos.

The most common ways to protect your assets during your lifetime and after death in Ohio, trusts. And there are different types of trusts.

The five most common types of trusts are:

Revocable living trusts. A revocable living trust is used during your lifetime to manage your assets and to protect your assets. Most people can name themselves as a trustee for this trust. And it can be revocable — you can transfer assets in and out of the trust as you please. And then to protect your assets after you pass, we can put language within the trust that says “My assets can transfer to my beneficiaries.”

The next type of common trust is a testamentary trust. This type of trust agreement is contained in your will and is often used for a child’s inheritance. So if you believe that you’re going to have a minor child when you pass away, then it would transfer into a trust for your minor child. That way it’s protected from any kind of creditors.

There’s also an irrevocable trust. An irrevocable trust offers some advantages over a revocable trust. However, there is a large disadvantage with an irrevocable trust, which means it cannot be revoked. There are certain exceptions to that rule but the general rule is, irrevocable trust cannot be revoked. This isn’t a very type of a common trust that we draft at my office, but it’s usually used for nursing home or Medicaid planning because, with the irrevocable trust, usually you have to name somebody else as the trustee. You can’t be the trustee of an irrevocable trust.

The next one is a special needs trust. Sometimes parents or others have loved ones that have special needs or disabilities, and they need to protect assets in order for this person to qualify for public benefits. Obviously this disabled person cannot be the trustee, somebody else would be the trustee. They can’t give money directly to the special needs person but they can help manage and pay for any kind of medical equipment or some groceries for that person, so it helps protect their assets.

Last but not least, there’s also retirement trust. This is a specific trust agreement that allows you to protect an individual retirement account from creditors and bankruptcy, while preserving funds for your beneficiaries. The funds are not disbursed to the beneficiary in lump sum, but they can be paid out in some kind of payments.

So I’d say the most common trust that we do at my office is the revocable living trust, because there’s just more flexibility to it, and the assets are held by the trust.

Within trust and estate planning for trust and wills, we can put a spendthrift clause in either your trust or your will. This is just an extra clause in the paperwork that prevents creditors from assets, so long as they are in a trust. So we put extra language in a will or in your trust that says, “Hey look, so long as the assets are sitting in the trust, the creditors cannot have access to those assets.”

Another common way to protect your assets during your lifetime or after death in Ohio, which we briefly covered, you can look into insurances or type of retirements. Insurance companies can provide some protection against creditors if you were get sued. But the biggest thing is that insurance can only cover so much, and insurance policies constantly change all the time. For me, I know that I have to renew my insurance policies every six months or every single year. So that’s a little bit of extra protection you can have in case you were to get sued for something.

Retirement accounts, yes, you can place your money into retirement account. As long as those assets that’s in the retirement account, it should not be subject to creditors. But like I said, the laws always constantly change.

Another way that you can possibly protect your assets during your lifetime and after death in Ohio is to form a corporation or form an LLC. These are business structures that help protect your personal assets from your business assets. It also gives you an extra layer of protection to protect your personal assets. So if you form a corporation or an LLC, that’s a separate entity from your own personal accounts. It’s just a different way that you can protect your assets. The corporation or LLC, those are specific to running a business. So, is it a law practice business? Are you selling something online as an LLC?

The big difference between the trust or LLC and the insurance is the different roles they play. For the corporation or LLC, there’s an operation agreement that needs to be drafted. That agreement lays out the terms and conditions of how you’re going to run that business. Within that operation agreement, we can do some estate planning tools or spendthrift clauses, but there are some limitations to the operation agreement because that’s specific for how you’re going to operate the business, who the partners are, how you’re going to dissolve, and who is responsible for what. That gives you an extra layer of protection from creditors, but it’s not always the best estate planning tool.

Insurance, like I said, only goes so far sometimes, and the policies keep changing. But yes, with the insurance, you can name a beneficiary and those assets would pass on to your loved ones.

Retirement accounts, that’s just specific to set up an account to hold assets. You can name a beneficiary to pass to your loved ones.

Trusts are specific for estate planning and holding assets. The main purpose of trust is to hold assets and determine, when a specific person dies, where that money goes. So the trust is a little bit more of an estate planning tool, but it can also be there to help protect you against creditors.

Proper gifting, this is a little bit more tricky. Proper gifting is a way to protect your assets, yes, but you need to be very careful about proper gifting. When proper gifting, we usually look at a few things. What is it, and who did it go to? And we look at the timeframe of that. Did you just give a loved one a piece of jewelry, or did you transfer a big asset like real estate to a person? Gifting usually needs to go to a relative. I always suggest having everything in writing, no matter if it’s a relative or not.

So proper gifting is a little bit more tricky, but we need to see what type of asset it is and who you’re gifting it to. If it’s a big asset, I always just recommend everybody put something in writing that says “This is a gift to a relative. They didn’t pay any money. My intent was to give it to them as a gift”. And when we also look at the timing of it. Did you know that you’re going to get sued, and then the next day you transferred something to a loved one? So we have to look at the timing of it as well. Those are a little bit trickier.

And of course, the gift tax, the proper gifting to avoid creditors, those laws always change. So it’s a little bit tricky, but when I meet with the client I want to see what type of asset it is, what the value of it is, and who you’re giving it to. And it needs to be put in writing.

For more information on Asset Protection Planning In Ohio, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (330) 222-3898 today.

Amy Turos, Esq.

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(330) 222-3898