Overview

In this episode of the Family Legacy Podcast, Michael Rutkowski and Kerry Guard dive into the key differences between estate planning and asset protection. They break down the importance of both approaches and how each plays a critical role in securing your financial legacy. From preparing for incapacity to protecting assets from creditors, lawsuits, and long-term care costs, Michael offers insights into how these strategies work together to ensure peace of mind for you and your loved ones.

Episode Summary

Michael kicks off the episode with a light-hearted cooking tip about making egg whites, but quickly transitions into the serious business of estate planning and asset protection. He explains that while estate planning is generally focused on what happens to your assets after you pass away, asset protection ensures that your assets are safeguarded during your lifetime.

Key topics discussed include:

• Estate Planning Basics: Michael explains that estate planning helps determine who gets your assets after you pass and ensures someone can make decisions on your behalf if you’re incapacitated. Tools like wills, trusts, and powers of attorney are crucial to any estate plan.
• Asset Protection: Asset protection involves strategies to shield your assets from risks such as lawsuits, creditors, bankruptcy, and long-term care costs. Michael stresses the importance of protecting your wealth while you're still alive and the role of elder law attorneys in helping families qualify for government benefits like Medicaid.
• Avoiding Probate: Michael emphasizes that avoiding probate should be a top priority, as the process is time-consuming and expensive. He discusses how trusts can help families bypass probate, saving them time and money.
• Revocable vs. Irrevocable Trusts: Michael addresses common misconceptions about irrevocable trusts, explaining that modern asset protection trusts offer much more flexibility than people realize. These trusts can provide protection from creditors and long-term care costs while allowing you to maintain some level of control.
• Common Mistakes: The episode concludes with a discussion of common mistakes people make when estate planning, such as failing to fund their trusts and not working with specialized attorneys to guide them through the process.

Michael also touches on future topics, including a deeper dive into the process of "funding" a trust, which will be covered in an upcoming episode.

Transcript

Michael Rutkowski
As if anyone's cooked egg whites before, you know it’s just so much more challenging than whole eggs because they stick to the pan and everything. So, here’s my quick tip for everyone: oil your pan, use non-stick, whatever works. Put in your ingredients, add the egg whites, cook on medium heat like normal. Then turn it down to low, cover it, and just leave it for about 10 minutes. It almost bakes the egg whites but keeps them from sticking. If I had it here, I’d show you. I made it for lunch later, but that’s my quick tip for egg whites.

Kerry Guard
Thanks for that lovely opener! Welcome to the Family Legacy Podcast, the podcast that goes beyond legal jargon and gets to the root of how to ensure your past, present, and future are protected. This episode is brought to you by the Rutkowski Law Firm, Michigan's leading asset protection, estate planning, Medicaid, and elder law firm. And you just heard from our host today, Michael Rutkowski. Michael, happy Tuesday!

Michael Rutkowski
Yeah, happy Tuesday! Excited to be here.

Kerry Guard
How’s it going?

Michael Rutkowski
It’s going good. It’s been a good start to the week. I went to the Michigan State game over the weekend with the kids. Everything's flowing in the right direction.

Kerry Guard
Fall is here!

Michael Rutkowski
Yeah, pumpkin spice lattes for those who love that stuff. Pumpkin everything! Pumpkin candles, pumpkin drinks, pumpkin whatever—you can throw it in anything.

Kerry Guard
Yes! I’m actually making something tonight—it doesn’t have pumpkin, but it gives me that fall feeling. I’m making a beef stew, and it’s simmering with all the fall vibes.

Michael Rutkowski
Chili! A month ago when the weather dropped into the 60s for one day, we were like, "Bring out all the chili, all the fall foods!" Sweaters, chili—it’s all so good.

Kerry Guard
Yes, I love fall. I love it.

Michael Rutkowski
We’re probably going to talk a lot about food on here! I’m sensing that we both love it. But let’s keep rolling.

Kerry Guard
So, what’s your favorite? You mentioned chili—is that your go-to fall dish?

Michael Rutkowski
Yeah, chili is the fall go-to for sure. I drink warm drinks year-round—coffee, of course. But yeah, more soups and chili in the fall.

Kerry Guard
Do you have a favorite recipe? Maybe we can drop it in the show notes!

Michael Rutkowski
Oh, for sure. I’ve been making this chili for like 20 years. I’ll send you the recipe!

Kerry Guard
Alright, folks—you’re getting recipes here! This is how we roll. We’re family-oriented, and with family comes cooking. It’s a joy, even though I didn’t always feel that way.

Michael Rutkowski
For sure! I found the struggle in cooking first, but eventually, I found the joy.

Kerry Guard
So tonight’s stew is going to be good. But for today’s topic, I want to talk to you about estate planning and asset protection. Apparently, they’re different?

Michael Rutkowski
Yeah, they are for sure! Let’s start with a definition for each and then explain what makes them different.

Kerry Guard
Great! Let’s do that.

Michael Rutkowski
When people think of estate planning, the first thing that comes to mind is, “What’s going to happen to my stuff when I pass away?” That’s what’s on everyone’s mind. They ask, "Should I use a will or a trust?" We can definitely get into the difference between those tools, but essentially, estate planning is about deciding who will get your stuff after you pass. Another critical part of estate planning is preparing for periods of incapacity—whether due to aging or an accident. Having powers of attorney in place is essential because you want to avoid the court system, which can be time-consuming and expensive for your family.

Kerry Guard
That makes sense. And what about asset protection?

Michael Rutkowski
Asset protection is taking estate planning a step further. It’s about protecting your assets from risks like lawsuits, creditors, bankruptcy, and a big one—long-term care costs. Long-term care in this country can cost between $10,000 and $15,000 per month, so protecting your assets from those costs is vital. Elder law attorneys typically help families qualify for government benefits so they don’t have to bear those high monthly costs. Asset protection also includes protecting your wealth from taxes and other liabilities.

Kerry Guard
So the main difference is that estate planning ensures your assets are protected after you pass, while asset protection protects your assets during your lifetime and beyond?

Michael Rutkowski
Exactly! Estate planning is more about planning for the next generation, like who’s going to get your stuff, but asset protection is focused on safeguarding your assets for you while you're alive and still need them. It's about protecting the person sitting in front of us as well as their family.

Kerry Guard
Why would someone need estate planning or asset protection? What are the key triggers for each?

Michael Rutkowski
Most people know they need estate planning, but it’s often something they don’t get around to. In fact, less than half of Americans have any estate planning in place. A big trigger for starting an estate plan is having kids. When you become a parent, you realize you need to plan who will take care of your children and how to distribute your assets. Another trigger is retirement, when people get their finances in order. In between these stages, people often feel invincible. They tend to wait unless they’ve had a personal experience with the probate court, which is time-consuming and expensive. That’s why many people want to avoid probate.

Kerry Guard
How does probate fit into this?

Michael Rutkowski
Great question. Probate is the court-supervised process of distributing a deceased person's estate. It usually takes between 9 and 18 months and costs 5-10% of the estate’s value. You have to provide notice to all interested parties, and it can lead to disputes if family members feel entitled to more. Probate can get messy and expensive, which is why we help people avoid it through trust planning and other strategies.

Kerry Guard
And asset protection—does it help avoid probate, or do you need both estate planning and asset protection?

Michael Rutkowski
Typically, you need both. Asset protection often involves trust planning, which avoids probate. So, by doing asset protection, you’re also avoiding probate. Asset protection also shields your assets from risks like lawsuits, creditors, and long-term care costs, while estate planning focuses on getting your assets to the next generation efficiently.

Kerry Guard
Got it. Now, what’s the difference between a revocable and irrevocable trust? The term “irrevocable” scares people.

Michael Rutkowski
That’s a great point. Irrevocable trusts used to be associated with estate tax planning because they transferred wealth to the next generation tax-free, but the assets were locked up. Asset protection trusts today are different. With a Medicaid asset protection trust, for example, you can still be the trustee and have control over the assets. There are different levels of protection based on your needs. It’s all about finding the right balance between control and protection.

Kerry Guard
What are some reasons why someone would want asset protection during their lifetime?

Michael Rutkowski
The three biggest reasons are protecting against lawsuits, long-term care costs, and taxes. Litigation is common, and long-term care costs can eat up your savings. Taxes, especially estate taxes, are another major factor. Asset protection helps shield you from these risks.

Kerry Guard
What are the most common mistakes people make with estate planning and asset protection?

Michael Rutkowski
The biggest mistake is not funding the trust. Once you create a trust, you need to transfer your assets into it. Most law firms don’t help with this, but we do. The second mistake is not working with a specialized attorney who can guide you through all the options.

Kerry Guard
Let’s talk about funding in another episode. It sounds like there’s a lot to unpack there. Thanks for sharing your insights today, Michael!

Michael Rutkowski
Absolutely! Looking forward to the next episode.

Kerry Guard
If you enjoyed this episode, please like, subscribe, and share. This episode was brought to you by the Rutkowski Law Firm. If you need help with estate planning or asset protection, give us a call at 248-955-2842. Thanks for listening, and we’ll see you next week!