Estate planning has many variables, but one of the main focal points is asset protection. One way to protect assets from creditors is using an Asset Protection Trust, which is only allowed in a handful of states. It is an investment managed by an independent trustee that allows for occasional distributions based on the trustee’s discretionary evaluation.
Here are ways to integrate asset protection into estate planning:
The main purpose of integrating an Asset Protection Trust into your estate planning is to make sure that your beneficiaries do not have to deal with extra-legal headaches like debt collection. Since inheritance can be a complex issue and beneficiaries may not have adequate financial knowledge, an Asset Protection Trust simplifies the matter. It protects assets from being distributed to someone such as a new spouse instead of your children.
Various Types of Trusts
There are different types of asset trusts to consider. Since minors cannot legally accept inheritance, you may want to structure a Discretionary Trust for a minor. Other special trusts can be set up based on individual beneficiary situations, such as adults who may have problems with money management or addiction, in which a Lifetime Discretionary Trust may be appropriate. A Special Needs Trust can be used for disabled beneficiaries who risk losing government benefits.
Customizing Asset Protection
Asset protection trusts can be set up to be specific or flexible, depending on your perspective. You may structure the trust, for example, so that when your child reaches a certain goal like achieving a college degree they become a co-Trustee. Trust distribution can be set up to pay specific bills or however the beneficiary wants to use them. You may want to make stipulations that assets can only be distributed if certain requirements are met by your beneficiaries.