Asset Protection Trust
Any type of trust that is taking ownership of assets in order to minimize the potential exposure to future liability from creditors and lawsuits is known as an asset protection trust. These trusts are created by an Indiana estate planning attorney to mitigate or avoid the effects of divorce, bankruptcy or taxation on the beneficiary. An asset protection trust has particular enjoyment of trust assets as it related to legal ownership of those trust assets.
Certain professions like doctors or lawyers might become the target of lawsuits more easily because of their perceived status and wealth. While it is certainly true that someone who is in one of these roles should definitely consult with an Indiana estate planning attorney about putting together a trust or exploring other options, anyone can benefit from considering asset protection as part of the bigger picture with estate planning.
No matter who you are, you could be exposing your assets to threats unnecessarily. Understanding how tools like trusts can factor into that bigger picture is key for being able to help you distinguish what you can accomplish with estate planning and asset protection planning.
Why Use an Asset Protection Trust?
Many people who are in the position of establishing an asset protection trust have substantial wealth and are curious about getting an appropriate level of protection to ward off potential lawsuits in the future or to shield certain assets from lawsuits. The person who creates a trust retains ownership and control of the trust assets; meaning that they are able to take assets outside of the trust or change the terms of the trust at any time.
The trust itself, however, only holds a title to the assets. In the event that a creditor does achieve a lawsuit win against the settler, the court can demand the pay out of trust assets in settlement of the claim filed by the creditor. An irrevocable trust is the most common method for establishing asset protection. The trust assets fall under the control of the trustee rather than the person who set up the trust and any changes or distributions made from that trust are done under the trustee's protection.
This can come in the form of a foreign asset protection trust or a domestic asset protection trust. Other forms of asset protection trusts can include a Medicaid asset protection trust which helps the applicant potentially qualify for Medicaid in the future. It is very important to consult an advisor who is very familiar with these various types of trusts and can help advise you about how to avoid many of the most common mistakes in putting together an asset protection trust. When you are concerned about substantial wealth or protecting your assets for yourself or for future generations. Establishing an asset protection trust can give you confidence and peace of mind.
Your Indiana estate planning lawyer is here to answer your questions on asset protection planning and to help you create a plan that addresses your needs for your family.