4 Reasons to Set Up an Asset Protection Trust

What is asset protection? 

If you look at it in simple terms, it’s the debtor’s side of the creditor-debtor relationship. You as the debtor want to use strategies and techniques to protect your assets from potential creditors.

What is an asset protection trust?

When you have an asset protection trust, it’s a way to shield your assets from creditors. It offers you protection from lawsuits and judgments against your estate as well.

Does the average Joe need a trust for asset protection?

It depends on the situation, your profession, and if you want to make sure your assets are available for your beneficiaries.

Are you considering setting up an asset protection trust? What are the benefits of this method of protection for your wealth and property? Here are four reasons for doing so.

1. Creditors Can’t Touch Asset Protection Trusts

You can’t stop someone from filing a lawsuit against you, but an asset protection trust will do just what the name implies. Your assets are protected because the trustee has control of the assets. Creditors cannot touch them.

If you’re in a position where someone might file a lawsuit against you in an attempt to get some quick cash out of you, an asset protection trust makes sense for you. Think of professions like a doctor or a high-profile media personality.

2. Minimize Estate Tax

It’s best to use an asset protection attorney to carefully set up the trust to minimize the amount of estate tax that’ll go to the IRS following your death.

3. Skip The Probate Process

Your beneficiaries won’t have to deal with the probate process once you pass away. Normally when your estate goes to probate, the executor collects your assets to pay off any outstanding debts and then distributes what’s left to your heirs according to the terms of your will or inheritance laws if you don’t have a will.

4. Protection If You Own a Business

An asset protection trust is a great way to protect yourself from personal injury claims and creditor lawsuits in the event you have to default on a line of credit or business loan. Sometimes, you can’t help what happens like in the past couple of years with Covid, for example.

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Is An Asset Protection Trust Part Of Your Estate Plan?

Now that you know the reasons for setting up an asset protection trust, will you make it part of your estate plan? Talk to a qualified asset protection specialist to see what’s best for you and your situation. Estate planning and asset protection planning are important in protecting what’s yours and planning for your future and your family’s future.

If you’re in need of more financial advice, you’re in the right place. Read our other finance-related articles and get your financial life in tip-top shape.