An asset protection trust is designed to protect your wealth from creditors and lawsuits. When you establish an asset protection trust, it is irrevocable. This means that the money and possessions covered by it may not be removed or withdrawn. Therefore, if you are sued, your asset protection trust is untouchable by claimants and creditors.
An asset protection trust is not suitable for everyone. The best candidates for this form of trust include business owners and other persons who are likely to be sued due to being in prestigious positions.
Setting up an asset protection trust
Before you can move assets to the trust, you need to appoint a trustee. This may be an individual, such as an attorney, or an institution, such as a bank. An individual with legal understanding is an excellent choice for trustee because they can facilitate the setup fairly easily.
Types of asset protection trusts
There are several different types of asset protection trusts that you can set up, depending on your needs. These include:
- Irrevocable asset protection trust. Once the terms for this trust are set, you as an individual will no longer be able to access the items protected by this. Only the trustee is recognized as the trust’s owner. They, alone, now control the assets and may distribute them according to the terms of the trust.
- Medicaid asset protection trust. With this type of trust, your assets are not taken into account when determining your Medicaid eligibility. This trust is usually established for a person with special needs.
- Irrevocable beneficiary trust. This protects the inheritance meant for your beneficiaries, especially if they are in debt or in the middle of a divorce.
Trusts for asset protection can help you safeguard your assets and safeguard the inheritance of your beneficiaries after your death. When you are ready to establish one, seek guidance from someone with experience in establishing trusts in California.
