Asset protection planning is typically a proactive action designed to protect your assets from threats like divorce, lawsuits, and creditors. An asset protection trust is a tool that is generally created by people who understand that their high net worth is attractive to creditors. This can include people who are very wealthy, or who have high-risk occupations (such as doctors). Additionally, asset protection trusts may be implemented instead of prenuptial agreements.
Which States Allow Asset Protection Trusts?
Currently, asset protection trusts are allowed in the following states:
- New Hampshire
- Rhode Island
- South Dakota
What Does an Asset Protection Trust Do?
These types of trusts are meant to protect your assets from certain legal actions. The trust itself has its own legal identity, as opposed to that of the settlor. That means that the trust itself can own property, bank accounts, stocks and bonds, and more. Additionally, the trust may participate in business deals and enter into contracts. The trustee merely carries out these activities on behalf of the trust.
This distinction carries with it a high level of protection since the trust and the trustee are not the same legal entity. Therefore, if someone were to sue the trustee, the assets help in the trust would be protected because they technically don’t belong to the trustee, but instead belong to the trust.
Asset protection trusts can also be set up in offshore locations. There are benefits and drawbacks to each. The important part of making this decision lies in what your goals, needs, and future plans entail. When you have worked hard for the assets you have, you want to be able to kick back and enjoy life without fearing that your assets could be taken. Ironically, one of the best ways to accomplish this is by giving control of your assets to a trust. This will help to keep them safe.
If you have any questions about how an asset protection trust can help you, it’s important to reach out to an estate attorney in Cherry Hill, NJ. Even if you don’t live in one of the states where they are admissible, you can still set up an estate in that area. It will be helpful to have someone who knows the law help you plan everything accordingly. This way you can ensure that your assets are safe and sound, free from any legal collection. Most importantly, you can live freely without worrying.
Thanks to Klenk Law for their insight into estate planning and asset protection trusts.