An asset protection trust is an excellent trust option for
- High net-worth individuals
- Business owners
- Medical professionals
- The elderly
Although these trusts are irrevocable, they offer substantial benefits, include the following.
Protection From Lawsuits and Creditors
Anyone who owns a business or deals with the public is at risk of losing assets in a lawsuit. By placing assets into an asset protection account, an individual can prevent losing them in a legal settlement. For those who are at high risk for being sued, including doctors, asset protection accounts are an invaluable tool for protecting their future and the future of their families.
If you experience financial difficulties or need to file for bankruptcy, you can keep creditors from going after your existing assets by placing them into an asset protection account. Although these accounts usually require an independent trustee to manage them and a spendthrift clause so that they are not misappropriated before being distributed to beneficiaries, they effectively safeguard assets for the future.
Prevent Medicaid Spend-Down
For many older people, paying for long-term medical care means depleting their savings and being unable to leave anything to their heirs. Medicaid is the best option to pay for the high cost of medical care, but qualifying for Medicaid entails a spend-down of assets, leaving nothing for beneficiaries. By establishing an asset protection trust, older adults can meet Medicaid qualifications without spending down their assets, allowing them to protect their family’s future. Although an asset protection trust is irrevocable, the trade-off is well worth it.
An asset protection trust protects everything placed into it so that beneficiaries can avoid probate and receive distributions quickly. Avoiding probate also spares heirs of the burden of legal fees, which can be substantial if probate must occur in multiple locations.
It is possible to establish an asset protection account either in the U.S. or offshore. For anyone mostly concerned about privacy, an offshore account might be the best option. Contrary to what many people believe, offshore accounts are not only for tax evasion purposes. For example, Swiss asset protection accounts are popular among business owners and high-wealth individuals because they offer a high degree of privacy with high standards for monitoring criminal activity.
Asset protection trusts are an excellent option to help plan for an individual’s long-term medical needs or the future needs of family members. An estate planning lawyer, like from Klenk Law, can discuss the benefits of these trusts.