Recently, our blog discussed how you might keep funds you inherited from falling into the hands of debt collectors. At the Bingham Legal Group PC, we understand how you and other Detroit residents might wish to prevent the same thing from happening to your loved ones. Is there anything you can do that might protect the assets you leave to your heirs from being taken by creditors they owe?
You may have several options to protect an inheritance you are leaving to your relatives from third parties, states AARP. These include the following:
Retirement funds – If you leave an IRA or 401(k) to your children or grandchildren, their creditors may attempt to claim funds to repay the debt. To avoid this, you might consider setting up a separate IRA trust. As you are aware from our past blog posts, trusts allow you to specify certain conditions for your loved ones’ inheritance.
Life insurance – A life insurance policy may give you peace of mind that your loved ones will be provided for after your death. Unless creditors claim the funds, that is. An irrevocable life insurance trust may help them avoid this complication.
Funds and assets – You might have already drawn up a will for your relatives to receive property, money and heirlooms. However, these assets may be claimed by their creditors if they are not protected. You might instead fund a trust for your loved ones, specifying that the money be used for college education, a down payment on a home, living expenses for a disabled loved one and other purposes.
Taking the correct measures may spare your loved ones future heartache. You may learn more about safeguarding wealth for your heirs by visiting our estate planning page.