As you age, you may begin to understand the importance of protecting the life you've built. You have many assets you've collected over the years, and you need to know that they're safe against liquidation or sale when you age and need care. You want to protect your savings for your heirs, too.
Anyone who has assets that could be at risk upon death or impairment should look into obtaining a trust to protect those assets. Trusts protect your assets against many situations where they could be used to pay off debts. For instance, if you're in a car crash and held liable, your trust may shield the majority of your assets from being used to pay back the victims.
How do you get an asset protection trust?
An asset protection trust is necessary to avoid serious losses. While some opt to use offshore trusts, there are options in the United States. Choosing an asset protection trust places your assets in a trust where an independent trustee controls them. In the majority of cases, creditors won't have a claim to them, keeping them safe for you later in life or for your heirs. You may be able to receive occasional distributions, as well, so your assets aren't necessarily lost to you once they're in a trust.
An asset protection trust has to meet a few requirements. These include the following:
- The trust must be irrevocable
- The trust has to have an independent trustee who is located in the state. The trustee may also come from a bank or trust that is licensed in the state.
- There needs to be a spendthrift clause
- All documents must be within the same state
- Some or all of the assets in the trust need to be in the same state as the trust
- Distribution can only be allowed at the trustee's discretion
Once your trust meets these requirements, your assets are better protected against those who may try to obtain them through judgments. Additionally, you'll be able to keep assets safe in the case that you have to go into a nursing home or reduce your overall net worth. Your heirs and beneficiaries may still receive distributions, and you will have some options to choose from when you set up the trust on how it's run. Your attorney can talk to you directly as you set up the trust to make sure it's an excellent way to protect your assets.