Asset Protection in Virginia: What can I do that won’t break the bank?
About a year ago (May 22, 2015), I wrote a newsletter article highlighting the possibilities of protecting your assets using a relatively new (to Virginia) device called a self-settled asset protection trust. In case you missed the article, a self-settled asset protection trust is a trust that you create well in advance of having creditor issues or sustaining potential liability for some event – be it professional malpractice, a car accident, or an accident in your home. If you are reasonable and transfer only so much of your assets to a self-settled asset protection trust that leaves you with sufficient assets in your name to satisfy your current and foreseeable creditors, you can be a beneficiary of the trust and still obtain creditor protection for the assets transferred into the trust. Creditors cannot sue to set aside the transfer to the self-settled asset protection trust after 5 years in Virginia. The advent of this new planning tool can be a boon to a family who would like to set aside a safety net or nest egg. Unfortunately, for many folks out there, the criteria that we would use to be sure that the protection would be available may be a little out of reach. Either they already have creditor issues or the cost of setting up and maintaining the asset protection trust is too high given the amount they have available to protect. What other solutions do we have to help?
For a married couple, one of the easiest forms of asset protection is to hold title to property as tenants by the entirety. Married couples can hold real and personal property (e.g., homes, and investment and bank accounts) as tenants by the entirety. When assets are held in this fashion, the creditors of one spouse cannot force the sale or partition of the asset held as tenants by the entirety. If the debtor spouse dies first, the surviving spouse takes title to the asset free of the deceased spouse’s creditors’ claims. Of course, if the surviving spouse is the debtor, then upon the death of the first spouse, the asset is available to the creditors. This protection is only available to married couples, and it does not protect the assets from the debts incurred by the spouses jointly (like a mortgage, typically).
Another option and probably one of the most overlooked ways to protect your assets is personal liability umbrella insurance. Approximately 20% of people with considerable wealth do not own one of these policies. An umbrella policy pays after your car and homeowners’ insurance has reached the limits of its coverage. In many cases, that amount may be below $500,000. In the event that a liability award is made against you in excess of the policy limits, your personal assets would be at risk. By purchasing an umbrella policy, you can protect your personal assets to a greater extent. Of course, you need to make some effort to match the amount of coverage in the umbrella policy to your assets with a little cushion to spare in the event of a verdict or settlement slightly in excess of your net worth. For instance, if your net worth is in the $1 million range, it makes sense to obtain an umbrella in the $2 million range. The truly remarkable thing about the umbrella policy is how affordable it is. Insurance for one home, two cars, and two drivers may be well under $500/year for $1 million in umbrella liability.
The attorneys at the Hook Law Center are well versed in asset protection in all its forms and are happy to talk with you about all your options.
ASK LUCIE
(Substituting for Kit Kat this week)
Howdy- Bark again! Phew! It’s been HOT! My owner won’t let me play as hard outside these days– something about getting overheated. I didn’t like what she was telling me, so I played a good old game of ‘nose soccer’ by myself and, boy oh boy, did it do me in!
If it’s too hot for your owner, it’s too hot for us pets! And YOWSER BOWSER that hot sidewalk! If it’s too hot for your owner to walk barefoot, imagine 4 bare (or bear??) feet! Same goes for cars– would your owner sit in a car with the windows barely cracked in a fur coat for very long before using their opposable thumbs to hold the cell phone and dial 9-1-1??? Nope… Pets, lets keep our owners on their toes!!!
Let’s talk hurricane preparedness for pets– Did you now that most shelters do NOT accept pets? I know right??? How insulting! So, if the humans in your family have to leave home and have to seek shelter someplace that we’re not welcome, here are some tips:
- Leave a day ‘s worth of food and PLENTY of water accessible for your pet.
- Write your cell phone (land lines may not be working) number on your pet’s collar in waterproof marker. Include area code!!
- Got a tiny pet/tiny collar? Wrap duct tape around a portion to make a larger writing surface– who cares if it’s fashionable– it will get you found!
- If your pet has a micro-chip, make sure it’s activated and the information on file is up-to-date. Hmm. As she was helping me write this, my human muttered something naughty!
- Make sure the tags on your pet’s collar are current.
- YOU STAND A MUCH BETTER CHANCE OF BEING REUNITED WITH YOUR PET IF ANIMAL CONTROL CAN IDENTIFY IT AS BEING ‘OWNED’.
- If you’re going to be traveling with your pet, do some research and find out if there are pet friendly shelters in the area, just in case.
This reminds me of a true story. Several years ago, during one of the hurricanes, my owner looked out on the front porch and was surprised by a Great Dane cowering in the corner. She had a current Rabies Tag, so the next morning my owner called the animal hospital on the tag, and they located the dog’s owner! Their fence had blown down, they didn’t realize it, and the dog got out. We may not get a lot of devastating storm damage, but something as simple as a blown-down fence can be just as bad for us pets!
Take care– take your heartworm, flea and tick treats!
BAYL (Bark At You Later)
Lucie
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