It’s conceivable that we will all experience some financial hurdles during our lifetime. Extensive debt, bankruptcy, health issues and long-term care are just a few examples of financial obstacles we might one day face.
And should they arise, an asset protection trust would protect your estate.
What is an Asset Protection Trust?
An asset protection trust is a trust that limits access to the assets placed within it. In the event that a creditor or court seeks to seize the assets of trust to which you are the beneficiary, the trust essentially “blocks” that access by declaring an “Event of Duress” and converting into a foreign trust that does not fall under U.S. jurisdictions.
The beneficiaries of the trust (that’s you) can still access the assets indirectly by allowing a separate trustee to distribute payments and assets from the trust as needed. The rules concerning the power of the trustee and its discretion to make payments are very complicated and require legal expertise.
In order to work, the trust must be irrevocable, meaning it cannot be changed or “undone”.
How to set up an Asset Protection Trust (APT)
You need to contact a good attorney who will take you through the process of overall estate planning, related documentation and the setting up of the trust as required.
Your estate should be of substantial value for this type of trust to be needed, typically around one million dollars or more.
In the event of your death, any property held within the asset protection trust will not be part of the probate process. Property that is transferred to the trust after your death through a pour-over Will is however, subject to probate.
To find out if an asset protection trust is right for you, give us a call. Our experienced estate planning attorneys can help you create an estate plan that fits your needs.