Why Can’t My Assets Just Be Transferred To My Spouse And Children?
Occasionally, transferring assets to your spouse and children can be part of your asset protection plan. However, transferring assets can raise serious difficulties in some situations. It is important to remember that you cannot retain any control over such assets. For example, you must actually file a deed with the county if you wish to officially transfer your house to your children. However, when you do file the deed with the county, it is entirely likely that you are creating a future income tax burden on your children, which they would not have received if they inherited the property through a trust upon your death. If your children transfer the property completely during their lifetimes, the property will not get the stepped up basis for income tax purposes that your children would have received from an inheritance transfer.
There are circumstances where both you and your spouse are facing the same asset protection issue. Therefore, it would be of no value to transfer property to your spouse. Also, if your children are minors, placing real estate into their names is going to create substantial title problems for you and make it practically impossible for you to ever sell that property. In addition to those considerations, difficulties arise when you transfer property to another and thereby expose that property to all of the other person’s liabilities. For example, if you transfer a rental home to your daughter and then your daughter experiences a severe disability from an automobile accident, that rental property is now going to be one of her assets and it will impair her chance to receive Medicaid assistance with her long term care needs. Further, because it is her asset, it is subject to being taken by a victim of that same car accident, who sues her.
Are Certain Assets Already Protected As Is?
Certain assets are already protected from creditors. For example, your social security income is not subject to being taken by the garnishment actions of a creditor. Unfortunately, the social security is fully liable for your Medicaid needs. Many pension and retirement accounts are protected as long as the funds remain inside the retirement account. However, if you take funds out of the retirement account and invest them, those investments do not have the same protection. Your homestead has some significant asset protection in that, outside of mortgages and certain types of material liens, it generally will be protected to the extent that creditors cannot evict you from your home during your lifetime. Unfortunately, under the current state of the law, creditor liens may still attach to your homestead and those liens can be kept alive indefinitely.
For more information on Asset Protection Planning In Oklahoma, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (405) 754-4166 today.
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