Asset Protection in Massachusetts

[passivechi]

We are retired couple in MA. For our asset protection, we have purchased 4-million Umbrella, put our home and investments at Vanguard/Fidelity under TBE (Tenants by Entirety). We also have separate IRAs.

Recently we had a meeting with an attorney who specializes in Estate and Trust. Since we do not have children, we prioritize on asset protection, rather than estate planning. We have learned:
1. TBE in MA does NOT provide asset protection for stock investments, although it does have limited protection for homestead.
2. Irrevocable trust is the choice. There are various types (we were given an example of SLAT-Spousal Lifetime Assisted Trust) and they are not cheap to set up and maintain. Also, since we are the only grantor and beneficiaries, we are not sure if if this will work or will be deemed as self serving or even fraudulent in court.
3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Please let us know your thoughts on irrevocable trusts in Massachusetts, or other options for asset protection to guard our retirement eggs. Thank you very much.

[Harmanic]

Homestead protection is limited to $500,000.
Most types of retirement accounts are protected.
Even if your estate is over $4 million above those amounts, a $4 million umbrella will ensure that your insurance company will defend your interests tooth and nail because it will be costly for them to lose.

An irrevocable trust might be overkill and would result in the loss of step up if you have taxable capital gains for your heirs.

Also, look at the incentive structure. Lawyers can make a lot of money on complicated trusts.

[TomatoTomahto]

3. Another option is to rely on the 4-million Umbrella and drive cautiously.

We live in MA and appreciate your cautious driving. You will be easy to spot.

We have just revocable living trusts and a $5M umbrella. After we die, a cascade of trusts get created, but while living no irrevocable ones.

[passivechi]

Homestead protection is limited to $500,000.
Most types of retirement accounts are protected.
Even if your estate is over $4 million above those amounts, a $4 million umbrella will ensure that your insurance company will defend your interests tooth and nail because it will be costly for them to lose.

An irrevocable trust might be overkill and would result in the loss of step up if you have taxable capital gains for your heirs.

Also, look at the incentive structure. Lawyers can make a lot of money on complicated trusts.

MA law does suggest TBE creditor protection for homes (although there were a couple of exception cases involving bank loans):
https://malegislature.gov/Laws/GeneralL ... 9/Section1

As of IRA accounts, we were told that there is $1 million limit for each person.

Yes, lawyers make profit. This is an industry here in MA. There must be quite some smart folks choosing irrevocable trust for good reasons, we surmise. Hope someone can offer more insights.

[Harmanic]

Homestead protection is limited to $500,000.
Most types of retirement accounts are protected.
Even if your estate is over $4 million above those amounts, a $4 million umbrella will ensure that your insurance company will defend your interests tooth and nail because it will be costly for them to lose.

An irrevocable trust might be overkill and would result in the loss of step up if you have taxable capital gains for your heirs.

Also, look at the incentive structure. Lawyers can make a lot of money on complicated trusts.

MA law does suggest TBE creditor protection for homes (although there were a couple of exception cases involving bank loans):
https://malegislature.gov/Laws/GeneralL ... 9/Section1

As of IRA accounts, we were told that there is $1 million limit for each person.

Yes, lawyers make profit. This is an industry here in MA. There must be quite some smart folks choosing irrevocable trust for good reasons, we surmise. Hope someone can offer more insights.

I have nothing against making profit. All I am saying is that the incentive structure might not be aligned with your interests. Keyword - might. It is good to be cautious and reaching out for other opinions (which you are doing here).

[TomatoTomahto]

Yes, lawyers make profit. This is an industry here in MA. There must be quite some smart folks choosing irrevocable trust for good reasons, we surmise. Hope someone can offer more insights.

We used a NH-based attorney who has office hours in MA every week or so. A good number of her clients reside in MA.

I don't recall her suggesting that an irrevocable trust (while we are alive) is necessary or recommended. It might be that our need for asset protection is less than yours, but we have significant assets that we would hate to see eviscerated.

[scarabrad]

Homestead exemption in MA has been increased to $1 million. FYI.

Irrevocable trusts, when properly structured, can both save on the ridiculous and unfair MA estate tax, facilitate estate planning (when set up as an intentionally defective grantor trust) and indeed provide a degree of asset protection, while keeping assets out of the beneficiaries estate. It is challenging to weigh paying estate taxes to MA vs the cost of the loss in step up in basis, although the benefits of creditor protection do allow me to sleep at night.

I don't believe financial assets held in TBE are recognized for creditor protection purposes in MA. Only homes.

SR

[beyou]

Homestead exemption in MA has been increased to $1 million. FYI.

Irrevocable trusts, when properly structured, can both save on the ridiculous and unfair MA estate tax, facilitate estate planning (when set up as an intentionally defective grantor trust) and indeed provide a degree of asset protection, while keeping assets out of the beneficiaries estate. It is challenging to weigh paying estate taxes to MA vs the cost of the loss in step up in basis, although the benefits of creditor protection do allow me to sleep at night.

I don't believe financial assets held in TBE are recognized for creditor protection purposes in MA. Only homes.

SR

Each state differs, but NY also has a "ridiculous and unfair estate tax" (with a cliff so $1 extra estate can cause taxation of entire estate).

My attorney was able to create an estate plan to reduce the chance of paying estate taxes without using irrevocable trust.
Seems our plan would not work in some situations, and others may need an irrevocable trust to avoid such taxes.

We went with a large umbrella to handle the asset protection part, and handing estate taxes outside an irrevocable trust for now.
If our estate grew much larger might have to reconsider, but as I am retired and we are down to a single employment based income, I may well be good with our plan. NY does raise the cliff each year with inflation, so we have to do much better than inflation to reconsider.

[beyou]

We live in MA and appreciate your cautious driving. You will be easy to spot.

My son lives there. I deal with NY/NJ area drivers every day, but the real bloodsport is in MA.
Everyone thinks they are NASCAR drivers in MA

[newparent7]

You might re-evaluate why you need asset protection beyond what you already have. Most of the large auto verdicts I see in the news either involve commercial businesses, gross negligence like drunk driving, or bad faith from insurance companies who refused to try to settle the case within policy limits.

[GoldStar]

3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Are you saying that if you get an irrevocable trust you won't drive cautiously?

I am comfortable myself with car insurance and an umbrella policy - but perhaps your wealth far exceeds mine. And - I do drive cautiously and plan to continue doing so regardless of how my assets are protected.

[TomatoTomahto]

We live in MA and appreciate your cautious driving. You will be easy to spot.

My son lives there. I deal with NY/NJ area drivers every day, but the real bloodsport is in MA.
Everyone thinks they are NASCAR drivers in MA

We moved from NJ to MA 7 years ago. It was mostly an improvement in our lives, but not so much the driving or taxes

[GoldStar]

When you say "irrevocable trust is the choice" - was that the choice of the attorney? The one that will charge you more to set up and maintain this "choice"?
Or did you make this choice and how did you come to it?
I might be missing something - serious question.

[exodusNH]

We are retired couple in MA. For our asset protection, we have purchased 4-million Umbrella, put our home and investments at Vanguard/Fidelity under TBE (Tenants by Entirety). We also have separate IRAs.

Recently we had a meeting with an attorney who specializes in Estate and Trust. Since we do not have children, we prioritize on asset protection, rather than estate planning. We have learned:
1. TBE in MA does NOT provide asset protection for stock investments, although it does have limited protection for homestead.
2. Irrevocable trust is the choice. There are various types (we were given an example of SLAT-Spousal Lifetime Assisted Trust) and they are not cheap to set up and maintain. Also, since we are the only grantor and beneficiaries, we are not sure if if this will work or will be deemed as self serving or even fraudulent in court.
3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Please let us know your thoughts on irrevocable trusts in Massachusetts, or other options for asset protection to guard our retirement eggs. Thank you very much.

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

A plaintiff would never chance a guaranteed $4M for a potential $10M. Juries are unpredictable.

Even the McDonald's coffee case was greatly reduced. They were egregious -- the plaintiff asked for help covering medical bills. McDonald's rebuffed her. At trial, it turned out that they intentionally kept the coffee at something like 190F.

[TomatoTomahto]

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

We have $5M and aren’t reckless. While we generally employ workers who are licensed and insured, you never know. If we were to crash into a doctor who performs surgery on multimillionaires and injured them, we feel comfortable with the extra buffer.

In any case, aside from the legitimate lawsuits, $5M should incentivize the insurance attorneys to bring their A team.

Infinitesimal chances perhaps, but why risk it?

[friar1610]

We live in MA and appreciate your cautious driving. You will be easy to spot.

Ain’t that the truth!

[exodusNH]

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

We have $5M and aren’t reckless. While we generally employ workers who are licensed and insured, you never know. If we were to crash into a doctor who performs surgery on multimillionaires and injured them, we feel comfortable with the extra buffer.

In any case, aside from the legitimate lawsuits, $5M should incentivize the insurance attorneys to bring their A team.

Infinitesimal chances perhaps, but why risk it?

Because it's a waste of money. Credit card companies could reduce fraud to near 0%. But they don't bother because the cost of doing so exceeds the benefit, both direct costs and in goodwill. The number of legitimate charges denied would anger customers.

To each their own, though. It's obviously not a large cost.

My point to OP was that extraordinary measures like irrevocable trusts was completely unnecessary.

[passivechi]

We are retired couple in MA. For our asset protection, we have purchased 4-million Umbrella, put our home and investments at Vanguard/Fidelity under TBE (Tenants by Entirety). We also have separate IRAs.

Recently we had a meeting with an attorney who specializes in Estate and Trust. Since we do not have children, we prioritize on asset protection, rather than estate planning. We have learned:
1. TBE in MA does NOT provide asset protection for stock investments, although it does have limited protection for homestead.
2. Irrevocable trust is the choice. There are various types (we were given an example of SLAT-Spousal Lifetime Assisted Trust) and they are not cheap to set up and maintain. Also, since we are the only grantor and beneficiaries, we are not sure if if this will work or will be deemed as self serving or even fraudulent in court.
3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Please let us know your thoughts on irrevocable trusts in Massachusetts, or other options for asset protection to guard our retirement eggs. Thank you very much.

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

A plaintiff would never chance a guaranteed $4M for a potential $10M. Juries are unpredictable.

Even the McDonald's coffee case was greatly reduced. They were egregious -- the plaintiff asked for help covering medical bills. McDonald's rebuffed her. At trial, it turned out that they intentionally kept the coffee at something like 190F.

We are retired and cannot afford to lose our non-replenishable portfolio. The argument for an irrevocable trust is that it may offer protection in a rare event. A rare event includes injuring/disabling jay-walking or cycling 20-30 year olds who are CEOs of startups and have potential of 100-million future earnings. Again, this is rare but not impossible (we often hear about those hit-and-runs in Boston area). And irrevocable trusts are good in theory, but remain to be tested in real court cases.

Am I over-concerned? Well, I wish I did not know about this stuff. My wife is oblivious and she is a better sleeper.

[Rocinante Rider]

$5M should incentivize the insurance attorneys to bring their A team.

Even better: $5M should incentivize most seriously injured plaintiffs to settle at the policy limit.

[newparent7]

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

A plaintiff would never chance a guaranteed $4M for a potential $10M. Juries are unpredictable.

Even the McDonald's coffee case was greatly reduced. They were egregious -- the plaintiff asked for help covering medical bills. McDonald's rebuffed her. At trial, it turned out that they intentionally kept the coffee at something like 190F.

We are retired and cannot afford to lose our non-replenishable portfolio. The argument for an irrevocable trust is that it may offer protection in a rare event. A rare event includes injuring/disabling jay-walking or cycling 20-30 year olds who are CEOs of startups and have potential of 100-million future earnings. Again, this is rare but not impossible (we often hear about those hit-and-runs in Boston area). And irrevocable trusts are good in theory, but remain to be tested in real court cases.

Am I over-concerned? Well, I wish I did not know about this stuff. My wife is oblivious and she is a better sleeper.

What if the stock market drops 95% and doesn’t recover during your lifetime? What if your bank goes under, you have more than FDIC limits, and the government doesn’t bail them out? What if you develop early onset dementia and need nursing home care for the rest of your life? There’s a lot of low probability events in life, and spending excessive money on asset protection for auto accidents can leave less available to deal with other potential financial problems.

[scarabrad]

As one who has been sued (high risk medical profession), just having my assets as shielded as possible, despite the absolutely miniscule risk of any personal assets being take, has allowed me to sleep better at night (not perfectly, but better). Though jury awards are often reduced, I will continue to look for any and all ways to appropriately shield assets so I can minimize the angst over waiting for the dust to settle in any lawsuit. Lawsuits can take many many years to resolve themselves. I have friends who have randomly been sued for seemingly minor things (minor MVA, etc) years after the incident and though most have been frivolous, I don't even want to have to question better advanced planning to shield assets from the ever increasingly litigious world we live in. I view it as the cost of living well in such a world.

[bsteiner]

We are retired couple in MA. For our asset protection, we have purchased 4-million Umbrella, put our home and investments at Vanguard/Fidelity under TBE (Tenants by Entirety). We also have separate IRAs.

Recently we had a meeting with an attorney who specializes in Estate and Trust. Since we do not have children, we prioritize on asset protection, rather than estate planning. We have learned:
1. TBE in MA does NOT provide asset protection for stock investments, although it does have limited protection for homestead.
2. Irrevocable trust is the choice. There are various types (we were given an example of SLAT-Spousal Lifetime Assisted Trust) and they are not cheap to set up and maintain. Also, since we are the only grantor and beneficiaries, we are not sure if if this will work or will be deemed as self serving or even fraudulent in court.
3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Please let us know your thoughts on irrevocable trusts in Massachusetts, or other options for asset protection to guard our retirement eggs. Thank you very much.

Does Massachusetts have tenancy by the entirety for personal property?

If you create trusts for each other, if they're sufficient mirror image, they may run afoul of the reciprocal trust doctrine. A creditor might be able to use that to attack them. Marty Shenkman and I wrote an article on this in the April 2012 issue of Trusts & Estates: https://www.kkwc.com/wp-content/uploads ... ctrine.pdf. They're otherwise not that difficult to create, and there's very little work to maintain them.

The clients who've created asset protection trusts for their own benefit have net worth of 8 or 9 figures, and if 8 figures, the first digit isn't a 1. Those are more effort to create and maintain.

[bsteiner]

...

Each state differs, but NY also has a "ridiculous and unfair estate tax" (with a cliff so $1 extra estate can cause taxation of entire estate).

...

New York's estate tax is often referred to as a cliff but it isn't a cliff like the former Connecticut and Massachusetts estate taxes were.

The New York exclusion amount is presently $7,160,000. The exclusion amount is phased out between 100% and 105% of it, so an estate of $7,518,000 gets no exclusion and pays tax of $707,648. In other words, the tax rate on the $358,000 excess above $7,160,000 is nearly 200%. So for many New York clients the planning is to keep the estate under $7,160,000.

[simplextableau]

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

A plaintiff would never chance a guaranteed $4M for a potential $10M. Juries are unpredictable.

Even the McDonald's coffee case was greatly reduced. They were egregious -- the plaintiff asked for help covering medical bills. McDonald's rebuffed her. At trial, it turned out that they intentionally kept the coffee at something like 190F.

We are retired and cannot afford to lose our non-replenishable portfolio. The argument for an irrevocable trust is that it may offer protection in a rare event. A rare event includes injuring/disabling jay-walking or cycling 20-30 year olds who are CEOs of startups and have potential of 100-million future earnings. Again, this is rare but not impossible (we often hear about those hit-and-runs in Boston area). And irrevocable trusts are good in theory, but remain to be tested in real court cases.

Am I over-concerned? Well, I wish I did not know about this stuff. My wife is oblivious and she is a better sleeper.

As someone whose entire job is litigation, you're nuts, respectfully. A $2 million umbrella is more than sufficient. The lawyers who are involved in these lawsuits don't have these fancy trusts either, by the way, and plenty of them have more assets than you. Because of how insurance legally operates, it's far more valuable than any other means of protecting your assets. If you hit and kill a CEO of a startup with $100 million in future earnings, and you have an umbrella policy, your liability at the end of the day will be your policy limits.

[chw]

3. Another option is to rely on the 4-million Umbrella and drive cautiously.

We live in MA and appreciate your cautious driving. You will be easy to spot.

We have just revocable living trusts and a $5M umbrella. After we die, a cascade of trusts get created, but while living no irrevocable ones.

Same with us, including a "pour over" trust created when the first spouse passes to double the MA estate tax exemption.

[n00b]

If you dislike MA law, perhaps a move is warranted?

[exodusNH]

$4M is an extraordinary amount of coverage. Unless you lead a particularly reckless life or perform surgery on multimillionaires, the chances are infinitesimal that you'd ever have a liability claim exceed that.

A plaintiff would never chance a guaranteed $4M for a potential $10M. Juries are unpredictable.

Even the McDonald's coffee case was greatly reduced. They were egregious -- the plaintiff asked for help covering medical bills. McDonald's rebuffed her. At trial, it turned out that they intentionally kept the coffee at something like 190F.

We are retired and cannot afford to lose our non-replenishable portfolio. The argument for an irrevocable trust is that it may offer protection in a rare event. A rare event includes injuring/disabling jay-walking or cycling 20-30 year olds who are CEOs of startups and have potential of 100-million future earnings. Again, this is rare but not impossible (we often hear about those hit-and-runs in Boston area). And irrevocable trusts are good in theory, but remain to be tested in real court cases.

Am I over-concerned? Well, I wish I did not know about this stuff. My wife is oblivious and she is a better sleeper.

Yes. You're over-concerned.

You're probably more likely to be struck by lightning than be involved in a lawsuit where your $4M umbrella would be insufficient.

[JazzTime]

As someone whose entire job is litigation, you're nuts, respectfully. A $2 million umbrella is more than sufficient. The lawyers who are involved in these lawsuits don't have these fancy trusts either, by the way, and plenty of them have more assets than you. Because of how insurance legally operates, it's far more valuable than any other means of protecting your assets. If you hit and kill a CEO of a startup with $100 million in future earnings, and you have an umbrella policy, your liability at the end of the day will be your policy limits.

I beg to differ, although I have no experience with personal liability cases. If you have assets of $10MM and carry a $5MM umbrella policy, then you negligently cause an injury, there is absolutely no reason why the injured party won't sue and collect $10MM or more. The policy limit caps the insurer's liability. It does not cap the insured's liability. Now it may be that, as a practical matter, the injured party may be willing to settle for the policy limit. But that's not required. An injured party is entitled to full compensation for his/her injury regardless of insurance coverage.

[simplextableau]

As someone whose entire job is litigation, you're nuts, respectfully. A $2 million umbrella is more than sufficient. The lawyers who are involved in these lawsuits don't have these fancy trusts either, by the way, and plenty of them have more assets than you. Because of how insurance legally operates, it's far more valuable than any other means of protecting your assets. If you hit and kill a CEO of a startup with $100 million in future earnings, and you have an umbrella policy, your liability at the end of the day will be your policy limits.

I beg to differ, although I have no experience with personal liability cases. If you have assets of $10MM and carry a $5MM umbrella policy, then you negligently cause an injury, there is absolutely no reason why the injured party won't sue and collect $10MM or more. The policy limit caps the insurer's liability. It does not cap the insured's liability. Now it may be that, as a practical matter, the injured party may be willing to settle for the policy limit. But that's not required. An injured party is entitled to full compensation for his/her injury regardless of insurance coverage.

This is the difference between theory and reality. I've discussed it before: viewtopic.php?p=7992885#p7992885

There are other posts. The incentives do not line up for a plaintiff to forgo the policy limits and gamble at trial. Let me be clear -- it doesn't happen. Every year I look at the largest jury verdicts in my state, which are still starting well below the $4m the OP has in umbrella coverage - I think last year #10 was $1.1 million. None of them were against individuals for vehicle accidents. None of them ever are.

If you don't believe me, jury verdicts are available through several research databases, including Westlaw. I challenge you to find one against an individual of any size -- and if you did find one, it would almost certainly not be against someone with an umbrella policy, which is really the specific scenario we care about.*2

* Trucking company accidents, or accidents where a person was driving in the course of employment, don't count because those are totally different -- in fact, the reason those are more are because of the large amounts of insurance -- above a certain amount, buying more insurance is actually increasing your risk of trial.

*2. Occasionally a jury awards way more in damages than the plaintiff requests, but those are likely occuring when there wasn't much insurance, so no incentive to settle, and the jury awards a surprise.

[TomatoTomahto]

If you dislike MA law, perhaps a move is warranted?

My lawyer and CPA joke about how much money we, and especially our heirs, would save if we just moved to NH. But, money isn’t everything.

[afan]

Too little discussion of risk.

How concerned one should be about asset protection depends on exposure.

A neurosurgeon has a high risk of malpractice suits and umbrella policies will not help.
Business people who use personal guarantees are another potential high risk group.

Someone could have the same assets and same lifestyle but far less risk because their job does not expose them.

Also depends on the influence of the plaintiff's bar and the inclinations of juries where you live.

That said, I doubt it would be worth the cost and hassle to do trusts for asset protection with total assets of $4 million. I gather MA TBE protection is quite good and better than homestead, which is capped. My understanding is that you can open financial accounts as TBE in MA but the asset protection only applies for the one real estate property that is your primary residence.

[White Coat Investor]

We are retired couple in MA. For our asset protection, we have purchased 4-million Umbrella, put our home and investments at Vanguard/Fidelity under TBE (Tenants by Entirety). We also have separate IRAs.

Recently we had a meeting with an attorney who specializes in Estate and Trust. Since we do not have children, we prioritize on asset protection, rather than estate planning. We have learned:
1. TBE in MA does NOT provide asset protection for stock investments, although it does have limited protection for homestead.
2. Irrevocable trust is the choice. There are various types (we were given an example of SLAT-Spousal Lifetime Assisted Trust) and they are not cheap to set up and maintain. Also, since we are the only grantor and beneficiaries, we are not sure if if this will work or will be deemed as self serving or even fraudulent in court.
3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Please let us know your thoughts on irrevocable trusts in Massachusetts, or other options for asset protection to guard our retirement eggs. Thank you very much.

We're not in a TBE state unfortunately. The mainstay of our estate and asset protection plan is a SLAT plus a malpractice policy and a $5M umbrella policy plus maxing out retirement accounts plus an asset protection trust for the house (these are allowed in our state). We still having exposed assets. Such is life. The likelihood of exceeding policy limits is very, very low. If a SLAT seems too expensive/complex, then you're probably done.

[passivechi]

We are retired couple in MA. For our asset protection, we have purchased 4-million Umbrella, put our home and investments at Vanguard/Fidelity under TBE (Tenants by Entirety). We also have separate IRAs.

Recently we had a meeting with an attorney who specializes in Estate and Trust. Since we do not have children, we prioritize on asset protection, rather than estate planning. We have learned:
1. TBE in MA does NOT provide asset protection for stock investments, although it does have limited protection for homestead.
2. Irrevocable trust is the choice. There are various types (we were given an example of SLAT-Spousal Lifetime Assisted Trust) and they are not cheap to set up and maintain. Also, since we are the only grantor and beneficiaries, we are not sure if if this will work or will be deemed as self serving or even fraudulent in court.
3. Another option is to rely on the 4-million Umbrella and drive cautiously.

Please let us know your thoughts on irrevocable trusts in Massachusetts, or other options for asset protection to guard our retirement eggs. Thank you very much.

We're not in a TBE state unfortunately. The mainstay of our estate and asset protection plan is a SLAT plus a malpractice policy and a $5M umbrella policy plus maxing out retirement accounts plus an asset protection trust for the house (these are allowed in our state). We still having exposed assets. Such is life. The likelihood of exceeding policy limits is very, very low. If a SLAT seems too expensive/complex, then you're probably done.

Thank you, Dr. Dahle for leaving a comment! I'm a big fan and appreciate what you have done.
Quick question regarding SLAT: a couple should in general set up reciprocal trusts to benefit both, correct?
Our understanding is that people use SLAT partly to make it easy for estate planning, not just for asset protection.

[afan]

Quick question regarding SLAT: a couple should in general set up reciprocal trusts to benefit both, correct?
Our understanding is that people use SLAT partly to make it easy for estate planning, not just for asset protection.

Actually, you need to be careful to avoid reciprocal trusts. That would effectively cancel the estate and asset protection advantages. It is possible for both spouses to create SLATs but this needs to be done carefully with a expert estate planning attorney to do it right. The two trusts must be substantially different from each other.

But you are far from the federal estate exclusion and do not indicate a need for trusts for asset protection. These factors suggest that SLATs may not be appropriate for you.

[passivechi]

Too little discussion of risk.

How concerned one should be about asset protection depends on exposure.

A neurosurgeon has a high risk of malpractice suits and umbrella policies will not help.
Business people who use personal guarantees are another potential high risk group.

Someone could have the same assets and same lifestyle but far less risk because their job does not expose them.

Also depends on the influence of the plaintiff's bar and the inclinations of juries where you live.

That said, I doubt it would be worth the cost and hassle to do trusts for asset protection with total assets of $4 million. I gather MA TBE protection is quite good and better than homestead, which is capped. My understanding is that you can open financial accounts as TBE in MA but the asset protection only applies for the one real estate property that is your primary residence.

4-million is the amount of Umbrella insurance (highest our insurance would issue), not our total asset.

[White Coat Investor]

We're not in a TBE state unfortunately. The mainstay of our estate and asset protection plan is a SLAT plus a malpractice policy and a $5M umbrella policy plus maxing out retirement accounts plus an asset protection trust for the house (these are allowed in our state). We still having exposed assets. Such is life. The likelihood of exceeding policy limits is very, very low. If a SLAT seems too expensive/complex, then you're probably done.

Thank you, Dr. Dahle for leaving a comment! I'm a big fan and appreciate what you have done.
Quick question regarding SLAT: a couple should in general set up reciprocal trusts to benefit both, correct?
Our understanding is that people use SLAT partly to make it easy for estate planning, not just for asset protection.

I'm not an attorney, much less an estate planning attorney in your state. That's the sort of question you want to ask to one of those. But I can tell you when I asked it to mine in Utah we ended up deciding to just have one trust (wife is beneficiary.) I was assured if there was a divorce or death that we could revamp things in an acceptable way.

Every good asset protection move (at least among the complex, advanced, expensive ones) needs to have estate planning or business purposes be its main reason for existence. When you're doing things JUST for asset protection, it's probably not going to work out like you think it is.