Lately, I’ve received many notes from clients with regards to their wills and trust, and how they can arrange the assets they own to gain advantage of various protections.
In response, I have drafted this memo in order to clear up their concerns.
The first bit of advice is that if you have a trust, it could be more beneficial to avoid transferring assets to the trust while you’re still alive. Instead, if you’re currently married, you should own all of your assets as JTBE or Joint Tenants by Entirety.
If you do not have this arrangement currently, and the joint accounts you do have are entitled as “husband and wife” or “joint with right of survivorship”, or indeed, any other classification that is not JTBE, you should close these accounts and open an account in both your names as a JTBE account.
The reason for this is that in the event that one spouse is involved in a lawsuit, the joint assets stored in the JTBE account will be protected.
However, if one of the spouses should die, or if they divorce, then the protection of the assets provided by JTBE discontinues.
When you first set up a JTBE account, it is well worth enquiring with the financial institution you are doing business with, if you can name a beneficiary of the account should you both die. The beneficiaries of that account could either be an individual or your trust.
One word of caution
The one thing that should not be in joint ownership is an automobile, because if only one of you is involved in an accident, all of the assets that you own jointly could be at risk, and that includes JTBE assets.
In addition to which, you should also check your automobile insurance provision, as a lot of people are often under insured, so you should opt for an excess liability policy of at least $1 million. These excess liability policies are also called Umbrella policies.
Being able to protect your assets is vital, and you need to take all necessary steps in order to achieve this prior to being involved in any lawsuits, or before your financial situation becomes difficult.
As well as this, many assets come with their own forms of protection, such as the cash value life insurance policy and annuities that are fixed on your home. Pensions can also offer a certain level of protection against general and unsecured liabilities.