A majority of people have assets, and it is imperative to preserve and protect them from creditors, lawsuits, and taxation. To do this, an irrevocable trust as part of one’s estate plan is an excellent asset protection tool. Luckily, there are many options to preserve and protect assets from lawsuits and creditors. This step is done with correct and up-to-date insurance policies to ensure funding in the event of a lawsuit and the creation of LLCs for rental properties.
How to Create an Estate Plan to Protect Current and Future Heirs?
A legal, proper estate plan is a must, and it is essential to work with a qualified estate planning attorney that specializes and focuses their practice on this area of the law. To create a plan, it should provide asset protection during the client’s life and after their death. Having a trusted advisor to help navigate this complex area of law is necessary as it involves several legalities concerning tax law, gifting law, probate, and the administration of estates. People need to have someone by their side that is aware of their future goals and can serve as a guide in how to legally achieve their dreams.
What Happens To Our Debts When We Die?
Debt does live on after a person’s death and becomes the responsibility of the estate. Whoever is named the executor will shoulder the responsibility to manage not only the estate’s affairs but utilize any remaining assets to pay off the remaining debt balance. Creditors can make a claim against an estate during the probate process, and this includes the federal government, student loans, along with credit card loans. However, if a trust does exist, then it is the responsibility of the trustee to pay creditors before the distribution of assets.
Am I Responsible for My Spouse’s Debts?
The nature of the debt and timing will drive the decision of whether or not the surviving spouse is accountable for the amount. In many cases, the spouse is responsible for all the credit card, mortgage, or car loans if the debt was accrued together before the spouse’s passing. An exception is student loan debt as spouses typically are not expected to pay the outstanding amount.
Creditor’s Claim Timeframe against an Estate
Creditors have the right to make a claim against an estate within a four-month timeframe from the date of the issuance of letters testamentary. Conducted during the probate court process, this occurs if the creditors can provide legal documentation to demonstrate the claim’s validity. The executor has two choices to make: they can either pay the debt from the estate or require the creditor to file a formal complaint. If the creditor fails to make an official claim, then the estate is not obligated to pay that particular creditor.
For more information on Asset Protection in the State of California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (619) 550-3080 today.