If you’re not particularly wealthy, you may look at an asset protection trust as something unnecessary. The truth is, they are valuable for everyone, regardless of the level of wealth a person has obtained. An asset protection trust is basically protection for all your assets, and everyone can benefit from that, including business owners, investors, and anyone else. Even a homeowner living paycheck to paycheck could benefit because his or her house is a huge asset. The following are a couple of reasons to consider speaking with a lawyer about drafting this type of trust.
Protection Against a Lawsuit
The world today is full of lawsuits. They come from everywhere, including family members, neighbors, employers, employees, and random strangers. If you lose a case and are ordered to pay a settlement, and you don’t have that kind of cash, your assets could be sold to pay the settlement. To protect your assets in such a situation, you’d want to set up a trust. These are typically irrevocable trusts and would require three things.
- You cannot amend or cancel the trust at any time.
- You cannot control the trust and will need a separate trustee.
- The trust will have a separate income tax return and it will need to be filed each year.
In an irrevocable trust, you don’t technically own the assets anymore, as they are owned by the trust. If you get sued for something, the plaintiff will only be able to go after anything outside the trust, which are still considered your personal assets.
Protection Against Negative Consequences at Death
Particularly if you have substantial assets, there could be some negative consequences that occur after your death. Even with a will in place, things get disputed and relationships are sometimes damaged because of it. An asset protection trust can assist you in avoiding the possibility of the following consequences to your surviving relations.
- Heirs fighting over who gets what and how much they each get.
- Someone squandering your assets against your wishes.
- Having someone you purposely left out of the will winning a claim on your estate.
- Having a creditor come after your assets.
- Not having your liabilities paid as you directed in a will.
Getting Started With Your Trust
As you can see, there are some great reasons to have a lawyer, like an estate planning lawyer in Memphis, TN, help you draw up an asset protection trust. Get started today by contacting an estate planning lawyer.
Thank you to the experts at Patterson Bray for their insight into estate planning and the law.