Legal

Who Needs An Asset Protection Trust?

Who needs an Asset Protection Trust?

If you own property that is of high financial value and you wish to protect it from creditors, setting up an asset protection trust is something worth considering. The asset protection trust is an estate planning tool that allows you to preserve a legacy and safeguard your family's future. To what extent the trust secures your estate depends upon the type you choose. While most trusts are able to prevent probate, the revocable ones are accessible to debt collectors. An irrevocable asset protection trust is reliable and effective for preserving wealth. Aside from protecting the estate from creditors, it also provides some tax benefits, and safeguards one’s interests in the event of a divorce, lawsuit, or bankruptcy.

Once you create an asset protection trust, it cannot be modified and can be nearly impossible to terminate. This type of trust is a component of advanced estate planning, thus establishing it demands the expertise of Estate Planning Attorney in Greenville, SC. Your legal advisor will refer to several factors in order to determine if this kind of trust is suitable for you and how it can be used to maximize your interests.

How Do Asset Protection Trusts Wok?

Since the asset protection trust is irrevocable, the transfer of assets to this trust is permanent. You will still remain in control of your estate and be able to manage finances as the trustee. However, the assets are no longer under your ownership, so they cannot be contested by anyone who sues you or seeks payment of a loan. The asset protection trust can be used to protect your business, real estate, investments, valuable property (expensive jewelry/watches, cars, art collection, etc.), as well as private bank accounts.

You do not need to include retirement or other IRA accounts to the trust, as they are protected from creditors by default. The asset protection trust is particularly beneficial for individuals who are running a large scale business and are increasingly susceptible to claims or lawsuits. It is not uncommon for companies to be sued by employers or clients/customers over trivial matters and lose all their business assets.

Setting up and maintaining this type of trust is expensive and time consuming, which is why it is not recommended to everyone. If you choose someone else as the trustee, you shall have to pay them for their services. You will have to work out the details of this trust with your attorney and customize it according to your personal needs and preferences. The contents of the trust will be distributed among the beneficiaries in accordance to given instructions upon your death.

Benefits of an Asset Protection Trust

The asset protection trust can be used to protect assets inside and outside the U.S. The trust established to overlook property within the country is sometimes referred to as ‘Domestic Asset Protection Trust’. If you want to safeguard offshore property, you shall need to invest in a Foreign Asset Protection Trust; creation and maintenance of this trust is more costly, as it deals with management of assets that would be subject to different laws.

The asset protection trust is particularly advantageous if you hope to qualify for the Medicaid program. Medicaid is a government incentive that grants affordable healthcare to seniors aged 65 and above. Medicaid typically denies funding to applicants who have substantial assets in their name. When your assets are transferred to the irrevocable trust, you become eligible.