Estate Planning Lawyer
If you are in the process of planning your estate, you may be wondering if setting up a trust is a good idea. There are several different types of trusts, some of which are better for estate planning than others. One type of trust is called an asset protection trust. This type of trust is unique because it is designed for a very specific kind of situation. This guide will go over everything you need to know about who should consider an asset protection trust.
What Is a Trust?
First, consider what a trust is and how it is different from other estate planning tools. A trust is essentially an agreement with a third party, called the trustee, to hold a set of belongings or money for a certain period of time. When a trust is established, a condition is placed on it and a beneficiary is decided. Then, when the condition is met, the belongings are transferred to the beneficiary. You can also choose for the belongings in the trust to be transferred back to the original owner.
If a trust is set up for estate planning purposes, the beneficiary will be whoever the estate owner wishes to inherit the belongings, and the condition is usually the death of that individual. Technically, however, the condition and beneficiary can be anything and anyone.
Asset Protection Trusts
The idea behind an asset protection trust is that the belongings will be safe while they are in the trust. This can be used to prevent the belongings from being taken, including through:
- Debt collectors
If there is some claim to the belongings, the fact that they are secured in an asset protection trust may prevent them from being taken. As you might expect, this practice is not always legal. Sometimes the claim to the possessions in a trust is legitimate and nothing can be done to avoid it. There is a short list of states that allow the formation of an asset protection trust, but most states do not allow it.
The first thing you should consider is whether or not there is some risk of your possessions being taken from you. Only those who are at risk of a lawsuit, excessive taxation, or who are in debt should possibly use this kind of trust. After that, the next thing to consider is whether it would be legal to form such a trust in your state. An attorney, like an estate planning attorney will be able to give you this piece of information.
Questions about trusts and asset protection in Texas? Contact us today for a free consultation.