If you’re a business owner or you work in a high-risk profession, asset protection may be a source of concern for you.
You could potentially consider the creation of a self-settled asset protection trust to proactively shield your resources. These trusts are alternately referred to as domestic asset protection trusts.
Future Creditors
The first thing to understand about a self-settled asset protection trust is the fact that you cannot decide to establish the trust after you know that you are going to be the target of a lawsuit. When you create the trust, it would protect assets from future legal actions not been initiated.
Irrevocable Trust
You are making a permanent decision when you convey assets into a domestic asset protection trust. It would be an irrevocable trust, and you would not be able to act as the trustee or change the terms.
A trustee who you engage would manage the trust, and you would not be able to directly access the assets.
State Laws
Self-settled asset protection trusts are not legal in most states in the union, including Kansas. However, you could establish a trust in a state that does recognize these legal devices, such as Missouri.
The trustee and the property must be physically located in the state where the trust is being established. Securing a trustee is not a difficult task because there are professionals in the states who will be willing to assume the role.
With regard to the assets, you have to move them to the state where the trust is created. This is simple if you are funding the trust with cash or securities, but it will not work with real estate that is located outside of the state.
Distributions
You may be able to receive distributions of the earnings and portions of the principal of the trust under the discretion of the trustee. It also be possible to make family members of your choosing eligible to receive discretionary distributions.
Asset That Are Not Protected
The asset protection would apply to most of your future creditors, but there are some exceptions to this rule. If you owe child support or spousal support, you cannot get around the responsibility by conveying assets into a self-settled asset protection trust.
Tax collectors can certainly go after assets that are in the trust, and a court can decide that assets in the trust should be made available under certain circumstances.
Other Asset Protection Methods
There are other ways to protect assets, and the right way to proceed will depend on the circumstances. A limited liability company or a family limited partnership can work for some business people, and you can potentially carry professional or umbrella insurance.
Schedule an Asset Protection Consultation!
You are definitely in the right place if you are interested in asset protection to preserve your legacy. We can gain an understanding of your situation, explain your options, and provide recommendations so you can make fully informed decisions.
At the end of the process, we can develop a custom crafted plan that covers all of your bases. Your assets will be safe and sound, you will live with peace of mind, and your loved ones will be properly provided for after you are gone.
If you are ready to set the wheels in motion, you can reach our Overland Park, Kansas estate planning office at 913-262-2000. There is also a contact form on this site you can use to send us a message, and if you reach out electronically, you will receive a prompt response.
- What the Trump Administration Could Mean for Your Estate Plan - December 2, 2024
- Litigation…a Necessary Evil? - December 2, 2024
- Now is a Good Time for a Donor Advised Fund - December 2, 2024
