The Benefits of an Asset Protection Trust
When it comes to asset protection, asset protection trusts are one of the best financial protection tools that you can use. When you have an asset protection trust, you are the settlor and the beneficiary. This gives you several benefits that other trusts wouldn’t give you.
The trust is its legal vehicle. It owns the property, bank accounts, stocks, estate and personal possessions. Here is what you need to know about the benefits of an asset protection trust.
If you are sued, the assets in your asset protection trust cannot be touched. The assets given to a beneficiary cannot be touched by creditors. If there is a court judgment against someone, the court cannot touch the money.
Sometimes the asset protection trust can prevent a lawsuit in the first place. If someone wants to file a lawsuit against you, but knows that you have an asset protection trust, then he or she may not follow through with the lawsuit. A lawyer will normally only recommend a lawsuit if there is a chance that the other person could recover enough assets to make the suit worth it. If your assets are in a trust, then there is no reason to file a lawsuit.
There are not many tax benefits to establishing an asset protection trust. There are, however, some tax benefits. An asset protection trust may eliminate or reduce your state income taxes. The trust might also remove assets from the grantor’s estate but the grantor can still benefit from the assets. Generally, when a person chooses this type of estate plan, they are not as interested in tax savings as they are in protecting their wealth from creditors.
If you choose a domestic asset protection trust, this is more affordable than a foreign asset protection trust. While domestic asset protection trusts are a newer concept than foreign trusts, you can utilize both to protect your assets. Many states that allow domestic asset protection trusts have flexible laws that make it easy to protect your wealth.
When it comes to protecting your wealth, there are several estate planning vehicles for you to consider. One of these vehicles is an asset protection trust. Not only does this protect your assets, but it can deter other parties from filing a lawsuit against you. To find out more about how to protect your assets, consider consulting with a trust lawyer from a law firm like Bott & Associates, Ltd.