Asset Protection
An asset protection trust is legal document allows a third party trustee to hold items of value and keep them away from judgment creditors. The document on which the trust is written is called a trust deed. The trustee must act under the terms of the trust deed. In general, the trustee is duty-bound to carry out the intent of the settlor. The trustee acts in a fiduciary capacity for the trust beneficiaries. Thus, the purpose of an asset protection trust is to keep assets out of the hands of creditors. We compare both offshore and domestic options. These types of trusts are available in US, UK, Asia and Africa.
Irrevocable Protection Trust
An irrevocable trust is a trust stipulating that that it cannot be readily revoked, altered, or amended. A trust is an agreement allowing property to be held by one party for the benefit of another. Irrevocable trusts are commonly used for asset protection and estate planning. A trust is a legal tool that consists of three parties:
- A Settlor who has the trust created.
- A Trustee who manages the trust.
- One or more Beneficiaries who receive the benefits of the trust.
You will also hear a Settlor also referred to as a Grantor or Trustor. A trust can also have multiple Settlors and/or Trustees. Then next question we answer is about revocable vs. irrevocable trusts, and how they compare.
Wealth Management
We offer a variety of ways to help meet your unique wealth management needs. Whether you’re looking to build and preserve wealth, save for retirement or leave something for the people and organizations you care about, we have many account and asset management options as well as professional services designed to help keep you on track to achieve your long-term goals.
Bankrupcy Provisions
So, when there is a bankruptcy, which state’s laws apply? If a certain court rules that a law applies because that is where the business or real property is located, the trust will shield the assets from bankruptcy. With modern statutes there is as ten year vesting period for assets in a such a trust before they are not considered part of the bankruptcy estate. The good news is that if such a legal tool is employed properly bankruptcy can be avoided altogether. We have seen many clients avoid a harmful Chapter 7 or Chapter 11 filing. They end up finding it not necessary when their holdings are secured safely in this secure legal tool.
As of this moment in legal time, the results cannot be forecast. Naturally, the judgment creditor will present arguments that support his position. The judge can rule either way. Because of the tremendous advantages offered by asset protection trust, one thing stands firm: when there are significant resources at stake, the creditor is going to challenge the legitimacy of the trust.
Offshore Trusts
Offshore trusts are a completely legal way to protect your assets.
In the increasingly bankrupt western world, you’ve got a target on your back. This target could cost you everything you have. Lawsuits are an everyday reality in the West and governments have not shied away from asset seizures in recent years.
Setting up a foreign trust is a bullet-proof asset protection strategy as it adds a layer between your assets and anyone trying to seize your wealth.
By using an offshore trust rather than one in your own country, you can enjoy additional protections simply not available at home.
Conveyance & Transfers
Fraudulent conveyance or fraudulent transfer is attempting to avoid a debt by moving assets to another person or legal entity. The law generally defines it as a civil matter, not a criminal one. Moreover, it is commonly addressed in creditor/debtor law. Judges often employ these statutes to restore assets that a debtor transferred in order to avoid payments to one or more creditors. It is also a common action brought by judgment creditors and trustees in bankruptcy cases.
Many people ask us about conveyance transfer and if they can get into trouble for moving assets into such a structure. The answer is, that conveyance transfer is merely a civil matter, not a criminal one. It is not a crime. You cannot go to jail for it. There are no fines. The most that can happen is a judge can put assets back to where they were in the first place.
Strategies
The best asset protection strategies involve legal tools and financial plans developed to shield valuables from lawsuits. These includes analyzing a list of assets that need protection and determining which legal instrument or strategy would ideally protect each one. Examples include forming certain types of trusts and companies and taking advantage of regional laws designed to protect assets. It can aid in achieving financial goals, estate planning for the next generation, as well as facing the reality that we are all vulnerable to litigation. Though pre-planning is best, there are even ways to protect yourself after a lawsuit is filed.
