Multiple types of trusts can be used in a well-structured estate plan. One type of trust that many people often overlook is an asset protection trust. An asset protection trust is a type of irrevocable trust that contains a person’s assets, placing them under the control of a trustee for the benefit of designated beneficiaries. Because the trust cannot be changed or revoked, assets transferred into an asset protection trust are generally no longer considered part of the settlor’s personal estate, making those assets less vulnerable to creditors or legal judgments.
When establishing the trust, the settlor transfers ownership of selected assets—such as real estate, investments, or cash—into the trust. A trustee, who may be an individual or a professional entity, manages the trust in accordance with its terms, distributing income or principal to beneficiaries. The trust’s terms typically restrict the settlor’s access to the assets, thereby strengthening protection against creditors.
When considering an asset protection trust, it is essential to be aware of the legal pitfalls that can compromise the trust’s effectiveness in protecting assets.
Contact Jacob Frizado in PSE’s estate planning department if you think an asset protection trust could be right for you by calling 937.223.1130.
