Offices in New Bedford, Hyannis and Easton
You’ve worked hard to acquire assets and grow your business so it is crucial to protect yourself, your business, and your assets from lawsuits, creditors, bankruptcy, and other disasters through asset protection planning. At Surprenant and Beneski, PC., we work with individuals, families, professionals, and business owners in Massachusetts to implement a variety of risk management strategies to protect their personal and business assets.
Our estate planning attorneys can help you explore options to protect your home, investments, and business interests. We will provide you with trustworthy advice on how to preserve the wealth you have worked so hard to accumulate. When you consult us, you will have peace of mind knowing that you and your loved ones will be protected from a variety of external threats.
Asset Protection Options in Massachusetts
Knowing that each client has different objectives, we tailor our asset protection planning strategies to meet your unique needs and will help you explore your options.
Limited Liability Company
A limited liability company (LLC) is a type of business organization that consists of one or more individuals who are considered members rather than partners or shareholders. Essentially, an LLC combines the attributes of a corporation with those of a partnership and serves to protect your personal assets from external threats such as lawsuits. At Surprenant and Beneski, P.C. we will guide you through the steps of establishing an LLC which include:
- Filing Articles of Organization
- Appointing a Registered Agent
- Preparing an Operating Agreement
- Complying with Tax and Regulatory Requirement
There are many benefits to establishing your business as an LLC, such as:
- Protecting your assets through limited liability
- Protecting personal assets (e.g. home, savings) from creditors’ claims against business debts
- Pass-through taxation (income/loss is reported on personal income tax forms)
- Fewer annual filing requirements than S and C corporations
It is worth noting that an LLC will not protect you from all personal liability. As an example, a business owner who personally guarantees a loan for the business will be personally liable for the debt.
Establishing a Trust
Although setting up an LLC will separate business assets from your personal assets and protect your home and other assets from lawsuit, there are a number of legal requirements and tax implications to consider. As an alternative, it is also possible to create a trust to own the business. In properly structured trusts, the only assets that can be the target of a lawsuit are those that are owned by the trust — the business assets, which means you personal assets will be protected.
Regardless of the size of your business, it is essential to obtain liability insurance, which will minimize losses from personal injury lawsuits. Additionally, certain professionals (e.g. insurance agents, consultants, independent contractors) should also obtain errors and omissions (E&O) coverage in the event of a claim by a customer or client that the business owner made an error that resulted in losses or breached the terms of a contract
An irrevocable trust is one that cannot be modified or terminated without court approval. The grantor, having transferred assets into the trust, effectively relinquishes his or her ownership and control of the trust assets.
- Charitable Trusts — A properly designed charitable trust can help to reduce income and estate taxes through a combination of gifting and charitable donations. In a charitable remainder trust, for example, property is transferred into a trust, another individual (the beneficiary) receives income for a certain time period, and a designated charity receives the remaining trust assets.
- Life Insurance Trusts — In an irrevocable life insurance trust (ILIT), the proceeds are removed from the estate and ownership of the policy is transferred into the trust. Although life insurance proceeds pass outside of an estate, they are included in the estate’s total value for estate tax purposes, so an ILIT can help to minimize estate taxes.
- Special Needs Trusts — This estate planning tool is designed to protect the public benefits that many special needs individuals receive (e.g. Medicaid, Social Security Disability Benefits). Because an inheritance could disqualify a beneficiary from such benefits, a Special Needs Trust provides money for additional day-to-day expenses while preserving beneficiary’s eligibility for government benefits.
Ultimately, the advantages of irrevocable trusts are that they avoid probate, minimize estate taxes, and assets held in the trust may be protected against creditors’ claims.
What are the disadvantages of an asset protection trust?
- Cost: Creating and maintaining an asset protection trust can be expensive, requiring attorney fees and trustee fees.
- Complexity: Asset protection trusts are complex legal documents, and it is important to have an experienced attorney help you create and manage one.
- Loss of control: Once you transfer assets to an asset protection trust, you will lose some control over them. The trustee will be responsible for managing the assets and making decisions about how they are used.
- Potential for fraud: If the trust is not properly drafted or managed, it could be vulnerable to fraud or attack by creditors.
Overall, asset protection trusts can be a valuable tool for protecting your assets, but they are important to weigh the pros and cons carefully before deciding whether or not to create one.
Are asset protection trusts worth it?
Whether or not asset protection trusts are worth it depends on your individual circumstances. Asset protection trusts can be a valuable tool for protecting your assets from creditors, lawsuits, and long-term care costs. However, they can also be complex and expensive to set up. If you have significant assets and are concerned about protecting them, you should consult with an experienced Massachusetts asset protection attorney to discuss your needs and options.
Contact Our Asset Protection Lawyers Today
At Suprenant and Beneski, P.C. we provide clients with advice and guidance on asset protection as part of a comprehensive estate planning strategy. When you work with us, we will take the time to understand your objectives and design an asset protection strategy that suits your individual needs. We have offices conveniently located in Southeastern Massachusetts and on Cape Cod. Please contact us today to set up a consultation.