April 6, 2017

Have you ever heard of a domestic asset protection trust? This is a tool in which you create a trust inside a U.S. jurisdiction in order to protect the person who is putting together the trust. One aspect that makes these different is that the person who creates the trusts and put assets into it is usually a beneficiary of the trust so that that person still gets the economic rewards of the assts placed into the trust. This can also guard against outside creditor claims, a primary reason why people want to engage in asset protection planning in the first place. 

There are many different reasons why you might want to take advantage of this type of trust. First of all, if you have a high net worth, you may want to remove the assets from being so closely connected to your individual assets in the event of a creditor claim. You might also be concerned about litigation risks that could expose your assets to judgments. These are two of the most common reasons why a personal will set up a meeting with an estate planning lawyer to walk through domestic asset protection trusts. There are several groups of people more likely to be targeted in lawsuits, including attorneys, officers and directors of public companies, and doctors. Often this is part of a bigger estate planning goal and can minimize fears about your personal assets being tapped by creditors or by lawsuits.

You might also have a person in your family who you would classify as a spendthrift or a person with disabilities. These kinds of trusts can be valuable tools for orchestrating the transfer of assets while giving the creator some peace of mind and comfort in knowing that all unique concerns have been considered.