Medical Power of Attorney
Asset protection trusts are complex trusts that shield assets from any future creditors. These trusts may also be called “domestic asset protection trusts.” When a grantor creates the trust, he or she permanently transfers the assets to a trust, which is irrevocable. Since the assets belong to the trust and not to the grantor, no future creditors may access the assets. When you create the trust correctly, then neither you nor the creditors can use the property. The grantor can, however, receive discretionary payments of income from the trust. Here is what you should know about establishing the trust.
How to Make an Asset Protection Trust
When you decide that you need an asset protection trust, it is important that you speak with an attorney. These are very technical trusts and can be complicated to establish. Not to mention, every state has its own laws regarding these kinds of trusts. You need someone who knows your state laws and how to establish the trust. There is a lot you must consider when it comes to your asset protection trust. You need to think about the state laws, your trustee, and what assets you plan to add to the trust. Keep in mind that if you have assets in another state, you may have to move them to the state that you are going to have the trust in order to add them to the trust.
States That Allow Asset Protection Trusts
These trusts are not allowed in all jurisdictions. The fear that many states have is that people will create these trusts to avoid creditors wrongfully. There are plenty of states, however, that allow some type of asset protection trust.
Here are the states that may allow the asset protection trusts:
- Wyoming
- West Virginia
- Virginia
- Utah
- Tennessee
- South Dakota
- Rhode Island
- Ohio
- New Hampshire
- Nevada
- Missouri
- Mississippi
- Hawaii
- Delaware
- Alaska
If you live in any of these jurisdictions, then you may be able to create an asset protection trust. Even if you live in one of these states, keep in mind that the regulations are going to vary from state to state. When it comes to protecting your assets, using an asset protection trust works for a lot of people. It’s important that you know whether or not asset protection trusts are allowed in your current jurisdiction. To find out more about asset protection, talk to an estate planning lawyer, like an estate planning lawyer in Memphis, TN, for more information.
Thanks to Patterson Bray, for their insight into establishing an asset protection trust.