Attorney Darol Tuttle joins Suzanne to talk about going beyond estate planning in asset management. Darol explains the differences between estate planning and asset protection planning. Estate planning is about handing the transfer of your wealth to heirs after you’ve passed on. Asset protection focuses on protecting your assets while you’re still alive, to finance your retirement throughout your life, and to fund the retirement of your spouse. You want specifically to defend against the three main threats, which are high unreimbursed medical expenses, unnecessary taxation, and family mismanagement/mistakes.
A great example to illustrate: Washington is one of 12 states with an estate tax, the highest in the country, with a $2 million exemption. But these days a home could cost $1 million. A life insurance policy, even term, counts as your estate, so if you had a $1 million home and a $1 million insurance policy, you’re hitting the cap. Washington also has a 7% capital gains tax. A bill introduced in Washington on January 20 proposed a third tax on wealth, a 1% tax on worldwide investments. So that’s three unique wealth taxes in the state, eroding our nest eggs. Setting up a simple trust doubles the exemption of a couple to $4 million, saving about $160,000 in taxes.
People going broke on long term care is a serious problem. People don’t understand spousal protection, and another trust set up by Federal law says if you leave money for your spouse in a spousal protection trust, for their benefit, then Medicaid spend down and transfer penalties do not apply. This is the most important trust in asset protection law, and has the fewest penalties.
So think about asset protection. Forget about asset transfer, think about putting the inheritance of your spouse in a bullet-proof silo so it doesn’t have to be spent down to $2,000, so she doesn’t have to be in poverty, so she can co-pay with Medicaid and have everything taken care of all the way to the finish line in comfort.
Learn more at the BoomX website or visit Darol’s YouTube channel.
