Asset protection generally involves planning to make sure that creditors cannot reach your assets or that the creditors of your beneficiaries cannot reach the assets that you are leaving behind for them.

Although many people will use this as a buzzword to motivate people into estate planning, in my experience, these types of issues are usually very minimal or non-existent, and are more often than not, a marketing device. Moreover, many of the more complicated techniques are quite costly to implement, and too expensive for a typical client.

Finally, if you already have creditors, the options for protecting your assets may be severely limited.

Trust Provisions

One practical way to provide asset protection for your beneficiaries (for example, if you have a trust set up for your children), is to have the distributions to your beneficiary made at the discretion of an independent third party trustee. You could also incorporate a "spendthrift" provision in the beneficiary's trust to prevent him or her from transferring or borrowing against their beneficial interest in the trust.

Retirement Accounts

Some assets have inherent creditor protection. For example, retirement accounts such as 401ks and IRAs have creditor protection features that may cause them to be attractive for those who are worried about creditors. Not to mention, retirement plans generally have great tax savings benefits as well. There are, however, limits to how much one can contribute annually to retirement plans, and generally withdrawals from these accounts are limited until one reaches 59 1/2 years of age (with some exceptions).

Asset protection should be part of the conversation you have with an estate planning lawyer; however, it's only one aspect and should be put into the context of your overall family and financial situation.