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When the Estate Plan Destroys the Asset Protection Plan

A recent case in Florida highlights the importance of having an Estate Planning attorney who also understands the rights of creditors to attack assets of a decedent. In Morey 2004 v. Everbank,and Air Craun, Inc, 37 Fla. L. Weekly D1739, the proceeds of a life insurance policy would have been exempt from the creditors of Mr. Morey had they been paid to an individual beneficiary, or even to a trust that contained the correct language to insulate the asset from Mr. Morey’s creditors. But because the policy named Mr. Morey’s living trust as the primary beneficiary, and the trust did not have proper language to protect the proceeds, the funds were available to Mr. Morey’s creditors, to the detriment of his heirs.

It is important to note that the estate planning documents are only one portion of a proper estate plan. Getting guidance about how to hold property and how to name beneficiaries can be crucial to a solid estate plan. Estate planning should not merely attempt to avoid probate, it should also have the goals of maximizing the available assets for heirs, minimizing the tax burden to the estate and allowing for a smooth and uncontested distribution of assets after an orderly administration.

Please contact an estate planning attorney at Penzien & McBride, PLLC for guidance in putting together or updating an estate plan.