Even Pennsylvania residents with modest means may wish to take steps to protect their assets from civil judgments or creditors. Medical emergencies can leave families with crippling bills, and a moment of distraction behind the wheel could result in a six figure award of damages. Many people associate asset protection with estate planning, and they often mistakenly believe that a revocable living trust is all that they need to keep what they hold dear away from the clutches of bill collectors or plaintiffs.
Assets may be placed into and removed from a revocable living trust at will while a settlor is alive, and any assets the trust holds at the time of their death are distributed privately and away from the public glare of probate court. Avoiding probate is the chief benefit of these flexible estate planning tools, but they provide very little in the way of asset protection.
Perhaps the most straightforward and comprehensive form of asset protection available to most people is an umbrella liability policy from their home or auto insurance provider. These policies are also relatively inexpensive. Married couples in Pennsylvania may choose to own their residence as tenants by the entirety. This means that both spouses own 100 percent of the property and creditors seeking to collect a debt from either one of them will be stymied.
Estate planning attorneys who practice in states like Pennsylvania that recognize tenancies by the entirety will likely suggest this form of asset protection to married couples, but they may also recommend liability coverage to provide more comprehensive protection against the possibility of significant personal injury lawsuit damages. They can also explain why the use of trusts may be a good idea in a variety of circumstances.