Asset Protection Trust: When is the Right Time?
Asset Protection Trust: When is the Right Time?
Have you ever stopped to think of how your assets will be distributed after your demise or during your old age? Many people have rising concerns that their assets might be used to take care of their old age needs leaving their children with nothing to inherit.
However, this should not be a source of scare because organizations such as The Mattar Firm have Asset Protection Trusts that help to hold your assets or funds on a discretionary basis. This process provides a perfect way to protect from creditors, taxes, ex-spouses, and bankruptcy on the beneficiaries.
Asset protection trusts help to split legal ownership by providing beneficiaries with equitable interests in trust assets even though they don’t hold legal titles to the assets in question.
When Should You Consider a Trust?
As we have seen above, it is imperative to keep your assets safe by creating a trust. When to make a trust? Many factors come into play when deciding and they include:
- Age-Establishing a trust when you are almost getting into a nursing home would not be a wise move. Such a client would be better off with other strategies like Medicaid spend-down. On the other hand, it would be too early to create an asset protection trust when you are still accumulating assets. Timing is of the paramount essence.
- Health– It is always best to create a trust when you likely don’t need any nursing or medical care in the near future.
- Long term care insurance coverage– If you have insurance covers that run for at least two to three years, it would be advisable to establish a trust later in the game.
How does it Work?
First, it is important to point out a trust entails a written agreement among three parties. This means it includes:
- The Grantor (Settler)– This is the person who puts his or her asset into a trust.
- The Beneficiary– A person who receives the benefits of a trust. Sometimes the grantor and the beneficiary can be the same person.
- The Trustee– A person or a party involved in managing trust assets. In this case, the concerned individuals must be a bonded, licensed, and insured company with a written mandate to protect the assets of their grantors from the creditors.
Importantly, you should consider creating and placing an International Limited Liability Company (LLC) under the trust. The trust should own 100 percent of the LLC.
What about Taxes
When it comes to taxes, the trust’s income is directly reported on the tax returns of the current beneficiaries. If it’s a grantor’s trust, then they are allowed to keep some interests of the funds and income inside of the trust. However, this cannot be recognized as a separate taxable entity. This is equivalent to holding funds in your name when it comes to taxes, but when it comes to assets it makes the whole difference between keeping and not keeping your money.
Final Thought
We have experienced significant changes in the risk arena. That’s why many clients want advice from their professional advisors on asset protection from creditor’s claims. They want to know if once they establish trusts they can protect their assets from those who sit on one end of the spectrum such as the government and those who expropriate private assets for public use.
In such undertakings, you will always need an experienced partner who you can trust. That’s why The Mattar Firm made it their life’s purpose to advice those seeking to set up safe asset protection trusts that can help protect you and your family.
If you wish to create or get advice on asset protection trusts, contact our asset protection attorneys today and start a journey towards peace of mind.