A Trust is a legal document where you leave your assets to another person, multiple people or a non-profit organization upon your passing. When someone begins putting arrangements in place for their death, most will include Trusts as part of their estate plan. There are several types of Trusts available, each serving its purpose and different levels of protection. This article will focus on Asset Protection Trusts by explaining what it is, who needs one, and setting it up correctly.
What is an Asset Protection Trust?
An Asset Protection Trust (APT) is a Trust where you select the trustee to manage your assets until your passing. To further explain, this means you would no longer have access to any of the items listed in the document. Additionally, APT is a self-settled Trust, which means you as the grantor can make yourself the trustee instead of another person. The reason you would select yourself as the trustee so you can continue to have access to the property or funds.
How do I know if I want to make myself the trustee or someone else?
To answer that question, you should understand the purpose an APT serves. The goal is to keep your estate, property, or money protected and away from creditors’ lawsuits. If you’re worried about creditors trying to claim your estate or funds, you should name another person as the trustee. This document will remove almost any possibility of the creditors gaining access to your assets.
Who Should Have an Asset Protection Trust?
If you’re concerned about another person or entity attempting to gain access to your personal property, estate, or other monetary funds, then you should consult a lawyer about developing an APT. Types of situations or organizations that could take actions towards your property includes:
- Creditors
- Lawsuits
- Judgments against your estate or business
Revocable and Irrevocable Asset Protection Trusts
Once you’re ready to begin, you’ll need to decide if you want a Revocable and Irrevocable Trust. A Revocable Living Trust authorizes you to make changes to it numerous times throughout your life. An Irrevocable Living Trust can’t be changed or altered once it’s formed. Consult with your lawyer on your specific situation to determine which type is best for your particular situation.
Setting Up an Asset Protection Trust Correctly
An Asset Protection Trust is more complicated to create than others. This is why it’s essential to work with an experienced estate planning attorney, like Auld Brothers Law Group, to make sure it’s completed correctly. If it’s not developed accurately, then you’re at risk of losing your assets.
Essentially there are two main steps involved with creating an APT.
Step 1: Creating the Document
- Choose the trustee
- Name the beneficiaries
- Set instructions in place on how the trustee should manage the assets
Step 2: Funding the Trust
- Plan on how to transfer the assets to the trustee
- Establish a limited liability company, if necessary
- Consider any current or future tax implications of adding the assets to the Trust
Are You Ready to Find Your Estate Planning Lawyer?
Making preparations now is essential to securing your assets and estate for future generations. Auld Brothers Law Group is an estate planning law firm serving the Pittsburgh community for generations.
Contact us to learn if an Asset Protection Trust is best for you and how we can help you get started.