Posted in Wisconsin Workers Compensation Related News
Protecting Your Assets – Should I Set Up a Trust?
An asset protection trust is used to protect real estate, personal property, bank accounts, investment accounts, businesses, and other assets from future creditors. Assets that are put into a trust may not be able to be used to satisfy debts, court orders or judgments as they technically are no longer owned by the person setting up the trust. An asset protection (AP) trust is self-settled, meaning that the settlor or grantor sets up the trust.
Types of Asset Protection Trusts
Irrevocable trusts are the only types of trusts to use if asset protection is your goal. In an irrevocable trust, the trustee is separate from the grantor and the grantor no longer legally owns the assets in the trust. If you or a family member wants to be sure that businesses, homes, investment accounts or family heirlooms stay within the family, protected from future creditors, one of the following types of AP trusts may be for you.
Domestic Asset Protection Trust
There are a few potential downsides to setting up a domestic AP trust. Since the United States legal system still covers the assets, they are subject to and at risk from court orders, bankruptcy laws and other federal and state laws. Since domestic AP trusts are relatively new, minimal legal precedent exists to demonstrate their protection against judgment. On the pro side, the domestic AP trusts are less expensive to establish than foreign AP trusts, the laws are more flexible and many states have adopted the regulations.
Foreign Asset Protection Trust
Foreign AP trusts are the gold standard for protecting financial assets. An example is the Cook Islands asset protection trusts, as assets outside of the United States are not subject to US court orders, as the trustee does not have to respond. So far, no US court order alone has broken one of the Cook Islands asset protection trusts.
Medicaid Protection Trust
Long-term care can devastate personal finances. When seeking federal help for long term elderly care, Medicaid is often an answer. However, the rules governing who can qualify are stringent. Since Medicaid requires a very low level of asset ownership to qualify, a Medicaid protection trust may help. There are many requirements, so it’s best to seek asset planning advice if meeting Medicaid financial standards is your goal.
How to Set Up an Asset Protection Trust
If you are concerned about protecting your personal or financial assets from future creditors, or if you or your family member needs to qualify for federal assistance for long-term care, contact a qualified estate planning lawyer in Memphis, TN. They will know how to advise you on federal and state laws and can suggest the best option for your situation.
Thanks to Patterson Bray for their insight into estate planning and protecting your assets in a trust.
