There are numerous ways in which to use estate planning to protect one's assets. For example, people in Pennsylvania use various trusts and other tools to avoid certain taxes or to protect an heir who has special needs or circumstances. However, trusts cannot always protect one's estate from legitimate creditors.
Earlier this year, Aaron Hernandez, former NFL football player for the New England Patriots, died by his own hand following a conviction for murder. According to Hernandez's attorney, the football star was also more than $1 million in debt despite having earned over $9 million over his pro football career. A judge recently ruled in favor of the attorney who sought confidential information regarding a revocable trust Hernandez reportedly established for his 5-year-old daughter just before his suicide.
Because a person establishing a revocable trust surrenders ownership of assets to the trust, such estate planning tools usually protect the beneficiaries from claims on the estate, such as the tax debt, wrongful death lawsuits and legal expenses Hernandez's estate is apparently facing. However, if it is discovered that the man established the trust for the purpose of evading those financial responsibilities, a judge may rule that the contents of the trust are fair game for those who seek satisfaction from the estate. Additionally, the confidentiality trust owners enjoy may be nullified if the trust becomes part of a public lawsuit.
Taking estate planning measures to protect one's family is a smart and generous move. However, shielding assets from creditors and others is best done well before claims against one's estate may arise. Seeking the advice of a Pennsylvania attorney in a timely manner is advantageous to those wishing to establish a revocable trust to provide this type of protection.
Source: New York Post, "Aaron Hernandez reportedly set up trust to dodge creditors before suicide", Yaron Steinbuch, Nov. 28, 2017