Protecting assets against loss is a common goal of estate planning. Asset protection trusts come in many different forms and can be used to protect property for the use and benefit of you as well as your families and other beneficiaries.
- An asset protection trust is a special type of irrevocable trust in which the trust funds are held and invested by the Trustee and are only distributed on a discretionary basis.
- The primary purpose of an asset protection trust is to keep the trust assets secure for the beneficiaries instead of being exposed to loss to the beneficiary’s creditors, in a divorce or to predators.
- There are two types of asset protection trusts you should know about: 3rd party trusts; and self-settled trusts.
- A third party trust is set up by one party for the benefit of another, while a self-settled trust is set up by one party for their own benefit.
Why use third party asset protection trusts?
- Leaving an inheritance outright to an heir is risky with Florida’s high divorce rates, and not to mention the risk of lawsuits and bankruptcies. Not to mention the risk of justspendthrift relatives who squander their inheritance.
- Your beneficiary may be born with a disability or develop one later in life, creating a sad situation whereby their inheritance is rapidly depleted by the expense of the disability but that same inheritance disqualifies the beneficiary from receiving government help in paying medical and other bills.
Trusts come in many forms, ask your Palm Beach Estate Planning Attorney about any of these today:
- Trusts for surviving spouses. If you are concerned that your spouse may not have the financial know how to take care of themselves after you are gone, then this may be a great estate planning decision.
- Trusts for disabled beneficiaries. If done properly these will not disqualify a disabled beneficiary from accessing the social security benefits they would otherwise be entitled to.
- Trusts for minors.
- Trusts for adults with drug and gambling problems (sometimes called spendthrift trusts)
Want to learn more about asset protection, estate planning, guardianship or probate proceedings? Check out our FAQ video library here.