How Does an Asset Protection Trust Work?

There are many different types of trusts out there, but only one is explicitly designed to shield your assets against creditors—the asset protection trust in Rockland, MA. Many trusts are revocable, which allows you to add or remove assets within the trust and direct the trustee on how to manage those assets on behalf of your beneficiaries. However, this is not the case for an asset protection trust. These trusts are irrevocable—meaning that any transfer of assets into the trust is permanent.

Asset protection trusts are much more complex than any other type of trust, which is why it is always a good idea to work with an estate planning attorney in creating one. The first step is to make the trust document. The information you use is typical to any other type of irrevocable trust—including naming a trustee, beneficiaries, and how you want the assets managed.

The second step is to fund the trust. This is where things get a bit more complicated. Depending on the type of assets you plan to transfer, you might have to establish a limited liability company prior to the funding. You also must consider any potential tax implications of adding assets to this type of trust.

This might all sound like a lot of work, but it can be worth it if you have a reason to protect your assets from creditors and lawsuits. Business owners, individuals with a high net worth, or those who simply want to safeguard themselves against those who may wish to take their money, can benefit from the protection these trusts provide.