Asset Protection Planning
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There are many types of irrevocable trusts that can help you secure your assets and reduce taxes. Is it a good idea? They include the following:
If your goal is to protect assets and income for loved ones, choose one of these trusts:
Irrevocable trusts offer many asset protection, estate planning and tax advantages. For the general public, an irrevocable trust may be very useful in protecting assets from lawsuits, securing financial help for a special needs child or providing for children after the death of the parents.
You need to be able to trust your trustee. What happens if you have a falling out with your trustee? Change them. The beneficiaries can simply vote in a new trustee. The trustee must not be you. The trustee also must not be someone up or down the family tree, cannot be a controlled employee and cannot be an agent of yours. If any of these parties were trustees it would lose its asset protection advantages because the courts would consider these people your alter ego.
Should you choose an irrevocable trust, some wise advice is to have it skillfully drafted by an experienced professional. This is extremely important, since a poorly worded document may not do what you intended for it to do and ruin your asset protection and estate planning goals. Contact an estate planning expert to see if an irrevocable trust will meet your needs based on your unique situation. For more detailed information there is an article entitled Irrevocable Trust Miscellaneous Provisions that discusses the requirements in greater detail.
Linsay Thomas, Technical Editor, contributing author