Asset Protection for Your Spouse - The Asset Protection Benefits of AB Trusts
On Monday I wrote about what asset protection means for you - How to Shield Your Assets From Creditors and Lawsuits. But aside for planning while you're alive, have you created an estate plan that provides asset protection for your spouse after you're gone? If you and your spouse still have simple "I Love You" wills, or if you and your spouse don't have an estate plan at all, then you should consider including AB Trusts as part of your estate plan, which offer the following benefits:
- The A and B Trusts are irrevocable and any assets owned by them will be protected from creditors and lawsuits.
- The A and B Trusts are irrevocable and any assets owned by them will be protected from a divorce settlement if your spouse remarries and later divorces.
- The B Trust can be drafted to take care of your spouse during his or her remaining lifetime but also to protect the principal for the benefit of your children or other beneficiaries - this is particularly important if you have a blended family and you and your spouse have a different set of final beneficiaries.
- What's left in the B Trust won't be subjected to estate taxes when your spouse dies. This could be really important if the estate tax exemption is allowed to revert back to the 2002 amount of $1,000,000 - then there won't be any possibility that an estate tax will be due on the B Trust even if your spouse's separate estate ends up being taxable.
If you're in the process of putting your estate plan together, then you'll need to let your estate planning attorney know up front that asset protection for your spouse should be built right into your plan. On the other hand, if you already have an estate plan but haven't considered all of the benefits of protecting your spouse after you're gone, then you'll need to sit down with your estate planning attorney to revise and update your current plan to include asset protection through AB Trusts.
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