An asset protection trust is a legal structure set up to protect your wealth. It allows for funds to be held for your beneficiaries on a discretionary basis until such time as they are permitted to use it. Almost any asset can be listed in asset protection trusts. This includes property, cash and securities.
These legal structures are normally governed by the laws of the jurisdiction in which they are set up. However, the settlor may appoint another governing jurisdiction if he or she chooses. It is important to remember that states will usually not recognize the laws of another state that conflicts with its own public policies. In addition, if the estate includes real property, then this will be governed by the laws of the state in which the property is situated.
One of the main advantages of these legal structures is that a creditor cannot claim any funds or property that is held in the estate of a beneficiary. This means that if the beneficiary owes debts, then the creditor must find other means of recovering those funds. The funds in the trust are generally always secured from court-ordered sequestration.
The ability of a creditor to obtain a judgment against the beneficiary is limited to their interests held in the agreement. Because the interests of the beneficiary are protected, this precludes the creditors from obtaining any property or money that has been set up for the beneficiary, even if the beneficiary has been declared bankrupt or has outstanding debts.
Many of these structures established by a settlor in the United States are considered to be a grantor trust under income tax laws. This means that any income that is generated or accumulated must be reported to the Internal Revenue Service as part of the income tax return of the settlor. These structures, while protecting money and property from possession by a creditor, do not offer any considerable tax advantages otherwise.
In such cases, the settlor is wise to seek legal counsel from a competent estates attorney, who can advise them of their options. However, it should be noted that failure to comply with such court orders may be viewed as contempt of court, which can lead to imprisonment for other penal fines. This is why it is important to have a clear separation between the settlor and those who have control over the assets, in a properly established trust.
Other requirements that are imposed by law is that the estate structure must have at least one appointed resident trustee and some of the administration functions must be conducted in the state in which it was set up. Normally, a settlor cannot also be a trustee.
For anyone who wants to set up asset protection trusts, they should first seek the advice of an estates attorney who has a lot of experience in the industry. It is important to make sure that all legal deeds are executed properly and that all assets to be covered are clearly indentified.
These legal structures are normally governed by the laws of the jurisdiction in which they are set up. However, the settlor may appoint another governing jurisdiction if he or she chooses. It is important to remember that states will usually not recognize the laws of another state that conflicts with its own public policies. In addition, if the estate includes real property, then this will be governed by the laws of the state in which the property is situated.
One of the main advantages of these legal structures is that a creditor cannot claim any funds or property that is held in the estate of a beneficiary. This means that if the beneficiary owes debts, then the creditor must find other means of recovering those funds. The funds in the trust are generally always secured from court-ordered sequestration.
The ability of a creditor to obtain a judgment against the beneficiary is limited to their interests held in the agreement. Because the interests of the beneficiary are protected, this precludes the creditors from obtaining any property or money that has been set up for the beneficiary, even if the beneficiary has been declared bankrupt or has outstanding debts.
Many of these structures established by a settlor in the United States are considered to be a grantor trust under income tax laws. This means that any income that is generated or accumulated must be reported to the Internal Revenue Service as part of the income tax return of the settlor. These structures, while protecting money and property from possession by a creditor, do not offer any considerable tax advantages otherwise.
In such cases, the settlor is wise to seek legal counsel from a competent estates attorney, who can advise them of their options. However, it should be noted that failure to comply with such court orders may be viewed as contempt of court, which can lead to imprisonment for other penal fines. This is why it is important to have a clear separation between the settlor and those who have control over the assets, in a properly established trust.
Other requirements that are imposed by law is that the estate structure must have at least one appointed resident trustee and some of the administration functions must be conducted in the state in which it was set up. Normally, a settlor cannot also be a trustee.
For anyone who wants to set up asset protection trusts, they should first seek the advice of an estates attorney who has a lot of experience in the industry. It is important to make sure that all legal deeds are executed properly and that all assets to be covered are clearly indentified.
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