The best strategy to win any game is to have a good offense and a good defense.

In the realm of creating wealth, a good offense is essential. Here, it is necessary to be efficient and to work smart. Luck, too, sometimes plays a role.

In the realm of protecting and preserving your created wealth, a good defense is essential. Here, it is necessary to identify the potential threats to your wealth. Once you have identified the threats, you should seek to learn the solutions.

Main threats to your wealth are taxes, long-term care costs, unnecessary court and legal administrative expenses, family disputes, lawsuits and divorce.

The good news is that with proper advance planning, you can structure your affairs so that all the above threats are minimized or avoided completely.

By using a revocable living trust and applying some care to the titling of assets and the beneficiary designations on file with the custodian of retirement plans and life insurance, taxes can be minimized or avoided and administrative expenses can be minimized.

Perhaps, most importantly, leaving assets to loved ones, usually children, in trust can protect these assets from loss in divorce and most other lawsuits. With some planning, this will benefit your family and give you peace of mind.

All of the above problems can be minimized or avoided altogether with advance planning.

Let’s imagine Melissa has a daughter named Kimmy who is a medical doctor. If Melissa leaves assets in trust for Kimmy’s benefit, these funds can be protected from lawsuits Kimmy might be exposed to as a medical doctor.

Leaving assets in trust can ensure that these funds will benefit Kimmy and Kimmy’s children.

Is that good defense? You bet it is.

Now, let us imagine another scenario: Erik has a son named Ferdinand who receives government benefits because Ferdinand has a disability.

If Erik fails to leave assets in trust for Ferdinand, the benefits Ferdinand receives from the government could be in jeopardy.

Leaving assets in trust for Ferdinand’s benefit can help ensure these assets will be there to supplement any benefits the government provides, instead of the benefits being lost.

Is that good defense? You bet it is.

Using the law as a shield to protect, with advance planning, you can protect your loved ones from their eventual inability, disability, predators (e.g., divorce claims, alimony claims) and creditors.

When doing your estate planning, if you leave your assets in a spendthrift trust for loved ones, instead of outright, you can protect them from

  1. their inability to manage the assets,
  2. their eventual disability,
  3. predatory spouses in divorce proceedings who try to get 50 percent of their assets, and
  4. their creditors.

You can make sure the assets will stay in your bloodline and will not be carelessly squandered, nor go to predatory spouses or money-hungry creditors.

We live in a litigious society. Statistics indicate 50 percent of marriages end in divorce.

Leaving assets in trust instead of outright can provide you with the peace of mind you deserve and protect your family and your family property.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney. www.mwinnesq.com