Protecting Your Estate from Creditors in Cary, North Carolina

What Happens to My Estate if I Get Into Financial Trouble and Owe a Lot of Money to Creditors?

Sometimes things happen that we don't foresee. Valid creditors have legal rights to recover amounts owed to them. However, sometimes some people get over their heads or carry liabilities that are insurmountable due to changes in the economy, land value, lawsuits, etc. A full discussion of creditor protection should be had with a bankruptcy attorney, however, there are some steps a person can make to protect some assets from creditors.

How to Protect Your Assets from Creditors?

If you are married, you can own your primary residential home with your spouse and shield it from creditors. Special protection given to married couples is if they own their home in both names and one spouse is unable to repay a creditor, the house cannot be reached by that creditor in order to protect the other spouse. Of course, the trade-off for this protection is marriage. Many people love and enjoy their marriage so this is an easy option for them. However, some do not want to get married, will not do it, or will not marry again.

Retirement accounts are generally out of reach from creditors too. So, open and fund retirement accounts to protect your earnings from creditors. The trade-off for retirement accounts is access to the funds. The law restricts you from using retirement accounts until you reach a certain age by imposing penalties and fees for early withdrawals.

Another, commonly unknown legal protection provided by North Carolina law is the use of an Irrevocable Trust. People who do not knowingly foreseeable creditor issues can, under certain conditions, prepare for the unforeseeable possibility that it may happen. The preparation includes the creation and funding of an Irrevocable Trust with assets they want to protect from creditors. This trust can provide discretionary distributions and benefits from trust assets to protect those assets. The trade-off for this protection is the cost to set it up as it requires competent legal counsel to learn and create the right Irrevocable Trust for you and your situation. Also, the use of this Trust will limit you to different extents from freely controlling and disposing of assets transferred to this Trust. However, in certain situations, this exchange is a small price to pay for the level of protection it can provide. This is a complex Trust that needs detailed discussion, analysis, and explanation in order to determine if it is an appropriate option for you. Contact Us Today to make arrangements to learn more.