By Daniel B. Evans
Copyright © 1995 Daniel B. Evans. All rights reserved.
Although tax planning has been a routine part of estate and business planning for many years, the last few years has seen an increasing interest in protecting assets from possible claims of creditors. This interest comes from several types of clients:
Professionals such as doctors, lawyers, and engineers who face the risk of large malpractice verdicts exceeding liability insurance limits.
Elderly persons who believe that nursing home costs and medical expenses might wipe out the inheritances of their children.
Entrepeneurs who are concerned that business reversals could jeopardize the financial security they have been trying to build for their families.
There are a variety of laws designed to protect creditors from schemes to hide or protect assets, but there are exemptions which provide planning opportunities:
Joint Ownership. In Pennsylvania, Florida, and some other states, the creditors of a husband or wife cannot attach property in the joint names of the husband and wife. For this reason, many doctors and other professionals keep assets in joint names.
Trusts. A person cannot set up a trust for his or her own benefit, but a trust may be useful in protecting a spouse or child from claims of creditors.
Life Insurance. In Pennsylvania, New Jersey, Florida, and many other states, both the death benefits and cash surrender values of life insurance are exempt from the claims of creditors of the insured.
Homestead Exemptions. In Florida and some other states, the value of a home may be exempt from claims of creditors if a declaration is filed or other conditions are met.
Evans Law Office
Daniel B. Evans, Attorney at Law
P.O. Box 27370
Philadelphia, PA 19118
Telephone: (866) 348-4250