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why you should protect your1216 .pdf

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why you should protect your
In the USA, there is a perennial risk of incurring a frivolous lawsuit. Consequently, high net worth
persons are more often choosing various strategies designed to protect their assets from these
types of suits. An irrevocable trust is one strategy commonly used to protect assets.
A trust is a legal entity wherein one party can store assets for the advantage of another party. The
individual who places the assets into the trust is named as the settler (or grantor), and the person
or entity that receives the benefit is called a beneficiary. The typical trust includes the parents as
the grantors and their children as the beneficiaries.
A thrid party called a trustee will manage the assets of the trust. The trustee is empowered to
obtain and divest the property held by the trust, with the stipulation that they must adhere to the
rules established for the trust. Usually, the state will specify guidelines concerning the trustee's
obligation to protect the trust's interests.

There are two types of trusts-irrevocable and revocable. The grantor can terminate a revocable
trust at any time, so these trusts tend to be utilized instead of a will in order to sidestep the
probate process. For this reason, these types of trusts won't be ideal for protecting one's assets.
Irrevocable trusts rank much more highly for asset protection, being that the settlor yields any
control of the trust property to the trustee Should the settlor be sued, the assets in an irrevocable
trust are typically unavailable. This will hold true as long as the grantor is not also the trustee or
Care must be taking when putting assets into this type of trust. If a court believes that the assets
were transfers in anticipation of fraudulent activity or a lawsuits, the transfers can be classified as
a fraudulent conveyance making the trust null and void. As a result, people are advised to set
these vehicles up well in advance of an potential legal troubles.
One must also be careful in structuring irrevocable trusts for tax purposes. Tax returns are
required for irrevocable trusts, and they will usually pay a higher tax rate than the average
individual.. Additionally, gifts to a trust can be considered gifts for estate planning purposes and
be subject to the gift and estate tax laws. There are ways of structuring these transactions to
remove the property from an estate without triggering taxes such as creating an intentionally
deficient grantor trust; however, these trusts often lose their asset protection value.
Irrevocable trusts can be an invaluable device for anyone looking to secure their family's future
regardless of what might befall them. But before deciding to wade in, consider obtaining the
advice of a tax attorney and one who specializes in asset protection. ft. lauderdale asset
protection attorneys

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