Introduction
Whether it be unexpected lawsuits, business disputes, or real estate liabilities, living in a fast- paced, high-stakes city like New York exposes your wealth to a wide range of risks. In such an environment, staying one step ahead is key: no matter your profession, protecting your wealth from legal threats, creditors, and financial uncertainty is a critical part of forward-thinking financial planning.
By using the right legal strategies, you can safeguard your assets, prepare for what lies ahead, and feel confident that your wealth is well-protected. Below are trusted, effective approaches to help both you and your business preserve what you’ve worked so hard to earn. Continue reading to learn how the Law Office of Inna Fershteyn can help you navigate these options and identify what works best for you.
Utilize Irrevocable Trusts
Irrevocable trusts are among the most common and effective asset protection tools available to individuals in New York. Once established, these trusts cannot be modified, which heightens their ability to shield wealth from creditors, lawsuits, and other legal claims. In addition to offering legal protection, irrevocable trusts also allow you to retain control over how and when your assets are distributed. Some even offer tax advantages. Here are some examples of trusts you can use:
Asset Protection Trusts (APTs)
While Domestic Asset Protection Trusts (DAPTs) aren’t available in New York, Offshore Asset Protection Trusts (OAPTs) can serve as effective alternatives. These trusts are set up in foreign jurisdictions, placing them outside the reach of U.S. courts and offering robust protection if you’re seeking to shield your assets from potential legal threats.
Medicaid Asset Protection Trusts (MAPTs)
MAPTs (Medicaid Asset Protection Trusts) allow your family to preserve assets while still qualifying for Medicaid, helping you avoid the need to surrender property to cover long-term care costs. These trusts are especially useful for individuals looking to plan for future healthcare needs without wanting to jeopardize your finances.
Irrevocable Life Insurance Trusts (ILITs)
An ILIT (Irrevocable Life Insurance Trust) helps protect your life insurance policies from taxes and creditors so that the full benefits go directly to your loved ones. When you pass away, the insurance payout is distributed straight to the beneficiaries you’ve named, just as if they owned it themselves.
Additional Trust Options:
Other examples include the Supplemental Needs Trust (SNT), that protect assets for beneficiaries with disabilities, and the Spousal Lifetime Access Trust (SLAT), which enables couples to protect their wealth.
Establish Limited Liability Companies (LLCs)
If you’re a business owner or real estate investor, forming a Limited Liability Company (LLC) is a smart option to consider. An LLC separates your business assets from your personal ones, limiting your personal liability for business debts, lawsuits, or asset seizures. It also helps you avoid double taxation and offers greater flexibility in how your business is taxed. With streamlined incorporation and tax filing processes, LLCs are especially effective for budding entrepreneurs.
Take Advantage of New York’s Homestead Exemption
Thinking of starting a family? New York’s homestead exemption is a valuable tool to safeguard your home from creditors. Whether you own a house, a condo, or similar property, this law lets you protect a portion of the equity in your primary residence from being taken to pay off your debts. This protection lasts even after the owner passes away, providing ongoing security for a surviving spouse and any children. The amount you can protect depends on the county where you live.
Benefit from Tenancy by the Entirety
Marriage opens the door to many new beginnings, including the opportunity to protect your shared property through tenancy by the entirety. This special form of property ownership safeguards your home from creditors unless both spouses are equally responsible for the debt. In addition, if one spouse was to pass away, the other would automatically inherit full ownership of the property without being burdened by any debts the deceased may have had. This arrangement eases your concerns about your savings while allowing you to focus on building your future together.
Create a Family Limited Partnership (FLP)
As the name suggests, a Family Limited Partnership (FLP) is a valuable tool for families looking to maintain control of their business while passing assets on to the next generation. An FLP allows you to gradually transfer ownership to family members over time, distinguishing between those who actively manage the business and those who are passive investors. It also protects your business from outside creditors and keeps management centralized and straightforward. Additionally, FLPs can offer tax benefits as part of a broader planning strategy, making them an ideal option if you’re looking to gift portions of your estate to future generations.
Next Steps
Navigating these options and their complexities can be challenging. To achieve the best possible outcome for your specific situation, we recommend consulting Inna Fershteyn, a law professional with extensive experience in asset protection. If you have any further questions or need assistance, please be sure to contact the Law Office of Inna Fershteyn at (718) 333–2394.
