Protect Your Assets- "Trust" the Process.
Updated: Oct 21, 2019
In an ever-growing world of uncertainty and litigation, everyone is looking for ways to legally protect their assets. A popular method is devising an Asset Protection Trust (“APT”). APTs shield assets from litigation from future creditors and even provides protection against divorces between spouses.
There are different types of trusts- such as discretionary trusts, resulting trusts, living trusts, etc. However, not all trusts are effective asset protection devises, the way to make your assets more secure is to separate your ownership from the asset. That means permanently transferring your asset into a trust which is wholly owned by the trust. This would not preclude the beneficiary(ies) from being able to receive discretionary payments of income and/or principal but only if the appointed Trustee approves such payments. Under certain circumstances, the person signing the Trust instrument, the grantor, may still be able to retain management of the Trust whilst still effectively relinquishing ownership of the asset(s).
Trusts, if set-up properly, can also be an effective tool used to protect assets from being wasted quickly by the beneficiary(ies) and can be used to mitigate the effect of inheritance tax upon the death of the owner. The effect on the amount of inheritance tax one would have to pay depends on the state/country one is residing in and in the case of real estate, in which jurisdiction the real estate property is located.
In the United States, APTs are permissible in only certain states which have legislation allowing for such trusts. An experienced lawyer should be consulted throughout the entire process to ensure that the assets are being properly transferred to the trust and allowing for the maximum asset protection possible given your particular circumstances.
The information contained in this article is provided for informational purposes only and should not be construed as legal advice. For more information on APTs in the United States or in the EU, please contact us at email@example.com
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