If you were to ask most Americans what estate planning entails, they'd likely say that it involves drafting a will, a power of attorney or maybe setting up a trust or something else along those lines. If asked to give a reason why they need each of these, they'd likely tell you to designate their assets for their heirs after they've died. What they may not know is that these are instruments, much like insurance, that can also help preserve an asset's value.
Asset protection is a large part of the estate planning process, especially if you've accumulated significant wealth or if there's the potential of you having money-hungry creditors hunting you (or your heirs) down.
Insurance is key to protecting the value of your assets.
If you have your own business in New Jersey or work in a field in which you're likely to be sued, then you'll want to have liability insurance to protect you and your business from being held personally liable for your company's or your professional mistakes. A homeowners or automobile insurance policy can help you protect the value of your home or cars. Umbrella coverage may cover other valuable assets.
Aside from having homeowners insurance, you may be able to keep your Middlesex home from being seized by creditors if you make a Declaration of Homestead. Generally, you'll be able to claim up to the entire value of the home depending on the laws in your jurisdiction.
Splitting up assets between you and your spouse may be a good option as creditors often are only able to lay claim to those in your name alone.
Another option for preserving the value of your assets is to put your funds into a trust. You'll need to designate beneficiaries when you set one up and also come up with a plan for when distributions will be made. There are many different types of trusts, each with their own set of pros and cons. An attorney can help you decide which type of trust is best suited for you and discuss other ways to legally protect your estate.