Farmers tend to be cash poor and asset rich. The worth of your farmland and related assets may exceed estate tax exemption amounts, leading to a hefty tax being assessed on your property once you pass on. Additional complications may further drive up expenses. Often, families find themselves selling land—or even the farm as a whole—to generate cash to cover these expenses.
Preventing that from happening is a key part of your estate plan.
When planning out how your estate should be handled after you pass on, it’s important to make sure your plans are put together in the most effective, efficient way possible. Estate plans have many moving parts, and the strategies you incorporate into your plan will depend greatly on the nature of your property and assets.
An estate planning lawyer helps with every part of your estate planning process.
Insurance can be expensive, and when you need to file a claim, you might find your business at the mercy of your insurance provider. The issues your business might have with insurance could be mitigated by creating a captive insurance company.
What Is Captive Insurance?
Captive insurance is a subsidiary company completely owned by your business and that provides risk mitigation services. In other words, your business creates and owns the company, and that company provides insurance coverage more or less on your terms.
A new year means new financial changes for many of us, and there may be challenges that come. In order to make sure your wealth is kept as secure as possible in 2019, you’ll want to implement a variety of tried and tested strategies. These will help safeguard your assets while maintaining profitability over the course of the next year.
Set a Goal
One of the first things to do in the new year to safeguard and expand your assets is to create an investment policy statement. This statement simply outlines what your investment goals are for 2019 and what methods you’ll use to achieve them. If you’re not sure where to start, consider talking to an asset protection attorney to determine where your investment portfolio’s weak points are and what you might do to improve your situation.
With any degree of wealth comes a certain amount of risk. Even if you aren’t massively wealthy, you still have assets that could come under attack, such as retirement funds, real estate, a small business, and life insurance plans. If you go through a divorce, face a civil lawsuit, declare bankruptcy, or face other scenarios in which creditors may come into play, you need to make sure you have these assets well protected.
One way to safeguard valuable assets is through a trust.
How Does a Trust Work?
Estate plans frequently have to account for minors who may not necessarily know how to handle their inheritance. One way in which this situation is handled is by creating a trust, but there are other methods as well. These methods can be quite simple, but knowledge of the laws pertaining to gifts and transfers of assets is still important.
One law, called the Uniform Transfers to Minors Act (or UTMA), provides a very simple way in which to gift assets to minors. There are just a few requirements to fulfill in order to work with this law.
The Uniform Transfers to Minors Act
Placing assets in trust is a sound strategy when it comes to asset protection and estate planning, but there are many different forms of trusts to choose from. Two of the main categories are irrevocable and revocable trusts. These each have their own advantages and drawbacks, so it’s important to make sure you choose the structure that works for your situation.
Revocable Trusts
A revocable trust is one that can be modified after it has been formed. If you need to change or retain control of the assets in the trust, add or change the designated beneficiaries or trustee, or make modifications to the distribution of assets held in the trust, then a revocable trust will allow you to do that while it’s in force.
Senior care can very quickly become expensive, especially when prolonged stays are involved. For those over 65, Medicare handles many expenses, but it is not designed to cover long-term care. If you are finding you need to plan for a nursing home stay, you’ll need to draw on other resources.
Unfortunately, without careful planning, this can mean a depletion of your estate, especially if you end up staying in a nursing home for years on end. This can cost hundreds of thousands of dollars, which will reduce the amount you can transfer to your loved ones when you pass on.
There are various strategies you can use to protect your assets from nursing home costs, and they all hinge on qualifying for Medicaid.
There are many ways to manage wealth and protect family assets, from trusts to charitable foundations to various legal entities. One method exclusive to families is a family limited partnership, or FLP. An FLP is a limited partnership in which family members pool resources for business purposes. They then reap a profit from the business in the form of dividends.
Structure of an FLP
Unlike other forms of limited partnerships, an FLP has two types of partners: general partners and limited partners.
Five Elements of Sound Estate Planning
A solid estate plan consists of multiple elements, each of which serves a different purpose. Each of these is vital to making sure your legacy is passed on to your loved ones without imposing undue burdens on them. For those who are highly wealthy, it can also serve to decrease taxes by keeping the entire estate’s value down to a more manageable (and untaxable) sum.
Here, we’ll go over five elements of a sound estate plan.
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