It is becoming more and more common these days for families to be blended. This means that there are children of each spouse from a previous relationship and/or the new couple have children of their own. In the midst of new relationships being formed, it is important to have a will or a trust in place to ensure that your property, and your wishes, are protected.

What is the difference between a will and a trust? Although some people believe that they are one and the same, a trust cannot replace a will. A trust will usually only focus on specific assets, while a will encompasses everything that is part of the person’s estate.

Why is this important for a blended family? Because if one of the blended spouses dies, how will their assets be divided? Without the proper documentation, the state, and not the remaining spouse gets to determine where the assets go. In some states, the property is split with the surviving spouse automatically receiving half. In this case, what happens to the other half?

In a family where there are no children from a previous relationship, dividing property is easier. But when there are step-children, children that primarily live with an ex-spouse, or children from the newly-married couple, things can get ugly in a hurry. It is easy to fight over which child deserves or needs more. Plus, the surviving spouse may resent part of the estate going to the household of an ex-spouse.

Without a will, the state makes the rules. Then you have to worry about someone contesting a decision, which is very likely to occur. Now, not only do you have to worry about assets not being divided according to your wishes, but those assets will have to be liquidated in order to pay the mounting legals bills from lawsuits.

In order to ensure that all children, and your spouse, is sufficiently provided for, it is essential that you have a will to disperse your property. Losing a loved one is painful enough: not having a will in place could cause the remainder of the family to break apart.

The Law Offices of James A. Miller is a member of the American Academy of Estate Planning Attorneys.

Asset protection plans are not one-size-fits all. Establishing the right plan depends on your current financial picture, your future financial goals, and most importantly, whose assets you want to protect. The methods used to protect your personal assets from your creditors are very different from those used to protect the inheritances of your spouse and children after you’re gone.

Protecting Your Property

What if a creditor sues you to collect a debt, and wins? Or, what if you’re in a car accident and the other driver sues you, and wins a judgment against you? The plaintiffs in these lawsuits become your “judgment creditors”, and they can take property owned and controlled by you in payment of the amounts they’ve been awarded by the court. So, how can you protect your property from judgment creditors?

1. Plan Ahead. If you wait to start planning until you’re sure there’s trouble coming, it’s likely too late. This is especially true if a lawsuit has already been filed against you. So, if you think you may need an asset protection plan, talk to an experienced attorney sooner rather than later.
2. After assessing your financial situation, your financial and retirement goals, and your estate planning goals, your attorney will help you put together an asset protection plan. And, transferring property into your revocable living trust is not enough. Asset protection planning can include methods like:

• Irrevocable trusts
• Transferring property to a spouse
• Funding certain retirement accounts
• A Family Limited Partnership

Protecting Your Spouse’s Property

What about protecting your spouse’s property after you pass away? The answer may be as simple as an AB Trust, which becomes irrevocable when you pass away and can not only protect your spouse from future judgment creditors, but can also be used for estate tax planning. Plus, estate planning with an AB Trust can provide your spouse protection from a divorce settlement if, after your death, he or she remarries and later divorces.

Shielding Your Children’s Inheritance

If you’re concerned about your children (or grandchildren) losing a sizable inheritance to creditors, future divorce, or simply due to their own poor financial decision making, there are steps you can take to protect them, too. A properly drafted lifetime trust can provide support for your beneficiaries for life, while protecting them from themselves, and shielding them from lawsuits.

Your estate planning attorney can help you secure not only your financial future, but also the futures of your spouse and loved ones.

The Law Offices of James A. Miller is a member of the American Academy of Estate Planning Attorneys.

If you’re married and you’ve done some basic estate planning, it’s likely that you and your spouse have “I Love You” wills. These are simple wills that a lot of spouses have, with which each of you leaves all of your possessions to your spouse.

And, for couples in fairly simple financial circumstances, “I Love You” wills may be just fine. But, if you find yourselves in any of the following scenarios, you’ll want to talk to an estate planning attorney about adding an appropriate trust to your estate plan.

Planning for Divorce

We’re not talking about an impending divorce between you and your spouse; but, what if one of you passes away and the other remarries. Especially if you have children, this can create a tricky situation. If the new marriage doesn’t last, and your assets aren’t protected, there’s a possibility that the new spouse could be awarded part of the assets in the divorce. Planning now, so that assets are held in an irrevocable trust after you pass away, could protect your property for your spouse and children in the future.

Protecting Your Assets

What about protecting property from creditors, or from the threat of lawsuits? Again, if you and your spouse have simple “I Love You” wills, your assets are vulnerable to these types of claims. With advance planning, though, your property can be transferred into an irrevocable trust, where it’s protected from lawsuits and creditors.

Minimizing Your Estate Tax Bill

With the estate tax poised to make a comeback in January, and at levels not seen in a decade, estate tax planning is on many peoples’ minds. Unless Congress steps in and passes new legislation, starting in 2011, if you pass away owning property worth more than $1 million total, then you could end up with an estate tax bill. And this “net worth” calculation includes the value of your real estate, your retirement accounts, and any life insurance policies owned by you. If you’re concerned about estate taxes, “I Love You” wills are not enough. However, with an AB trust, you can minimize or possibly even avoid an estate tax bill.

So, if you find yourself with any of these concerns, make an appointment with an estate planning attorney. He or she can let you know whether your “I Love You” wills are enough.

The Law Offices of James A. Miller is a member of the American Academy of Estate Planning Attorneys.

Estate planning is one of the top ways used to protect your assets.

Estate plans can reduce the turmoil and heartache that can sometimes occur when our loved ones die unexpectedly and their property needs to be distributed. It’s not uncommon for arguments to occur between family members and if the distribution of assets is contested, this can result in an lengthy and expensive court battle.

Estate planning also allows you to decrease the amount of tax that needs to be paid when your estate passes to your beneficiaries. And if there’s less taxes to be paid, there’s less need to sell assets to generate cash flow for your estate.

Estate plans can provide for beneficiaries as well. For example, if a child is under a certain age, then you can make a plan that protects your assets and preserves them until the child becomes old enough to inherit. This is often done by establishing a trust and designating a trusted third party to take over the role of managing the assets.

To learn more about protecting your assets with an estate plan, give us a call.

The Law Offices of James A. Miller is a member of the American Academy of Estate Planning Attorneys.