The term asset protection trust is generally used to describe a type of trust that is created for the purpose of providing protection for money, personal property, and/or real property. A trust of any type is created through the use of a legal document that follows formalities established under state law. The trust becomes the legal owner of property that is transferred into it. That property is managed by a trustee and used to provide for beneficiaries. Ownership and possession is bifurcated, or split, which has some advantages.
Most trusts are created for purposes of providing some kind of asset protection, but there are actually many different kinds of trusts that exist. These different kinds of trusts can keep assets safe in different ways, and can provide protection from different kinds of risks. To make sure you create the right kind of asset protection trust and to ensure you follow the necessary formalities so the trust provides the desired protection, give us a call today to get help from a lawyer who knows New York trust law.
What Exactly is an Asset Protection Trust?
According to Investopedia, an asset protection trust is: “A vehicle for holding an individual’s assets to shield them from creditors.” Not all jurisdictions allow this kind of trust to be created. However, you may have the option of creating an asset protection trust in a jurisdiction within the U.S. that permits this kind of trust, or you may wish to create an asset protection trust in an offshore jurisdiction which has favorable laws protecting your assets.
When you create an asset protection trust, the trust you have created is given ownership of the assets you are trying to protect. You must make certain you have appropriately transferred all of those different assets into the asset protection trust. You have to follow the formalities of creating an asset protection trust as well, which requires expert legal guidance.
Provided you have chosen the right jurisdiction to create your trust, and followed the rules for trust creation, the property held within the trust should be safe from creditors who may wish to take your assets. A creditor is going to have a difficult or impossible time getting ahold of the money in the asset protection trust if the creditor wants that money to satisfy a judgement. This could mean the creditor would have more incentive to settle and at least obtain something, rather than fighting to try to obtain a full amount that is due.
An asset protection trust can deter traditional creditors from pursuing action and can also be a useful tool in case of a lawsuit or other potential threat to assets. Since the assets are safely owned by the asset protection trust, they are far less vulnerable to loss than they would be if owned any other way.
Getting Help from A Rochester Asset Protection Trust Lawyer
While an asset protection trust is a very common type of trust, you should not assume that creating an asset protection trust is the only option available to you to protect assets, nor should you assume that it will provide the full protections you expect. When making your estate plan, you need to know exactly what the rules are for both revocable trusts and irrevocable trusts. You also need to be aware of limitations and restrictions that different forms of trust creation can impose.
The Law Office of Michael Robinson, P.C. knows the laws in the state of New York for creating a trust and we can help to ensure you make smart choices when it comes to an asset protection trust. Our legal team will discuss your finances, family, and financial goals and will help you to determine if a trust is needed, what type of trust, and what you have to do to create the trust that will provide the desired protection.
To discover more about the goals of an asset protection trust, and about what a trust can do for you, you can download our free estate planning worksheet. You can also give us a call at 585-374-5210 or contact us online to speak with a member of our legal team about the ways in which we can help you to keep your assets safe so the fruits of your labor can create financial security for you and for future generations.