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WHAT IS A TRUST
Irrevocable Trust: An irrevocable trust typically transfers your assets out of your (the grantor's) estate and out of the reach of estate taxes and probate, but cannot be altered by the grantor after it has been executed. Therefore, once you establish the trust, you will lose control over the assets and you cannot change any terms or decide to dissolve the trust.
An irrevocable trust is generally preferred over a revocable trust if your primary aim is to reduce the amount subject to estate taxes by effectively removing the trust assets from your estate. Also, since the assets have been transferred to the trust, you are relieved of the tax liability on the income generated by the trust assets. It will also be protected in the event of a legal judgment against you.
A trust is a contract and a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
Trust can protect your assets in the event of your death. If disbursement of your estate is the primary reason for the trust, you can use either a revocable or an irrevocable trust. Trusts can usually avoid probate and lawyer liquidation, which means your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will.
Like a will, but with more certainty, a trust can ensure your estate is divided up according to your wishes as expressed in the trust documents. Since the trust has direct control over your assets upon your death, there’s greater certainty they will be distributed according to your specific wishes.
Like a will, but with more certainty, a trust can ensure your estate is divided up according to your wishes as expressed in the trust documents. Since the trust has direct control over your assets upon your death, there’s greater certainty they will be distributed according to your specific wishes.
REVOCABLE VS. IRREVOCABLE TRUST
There are many types of trusts; a major distinction between them is whether they are revocable or irrevocable. Each carries it's own pros and cons.
Revocable Trust: Also known as a living trust, a revocable trust can help assets pass outside of probate, yet allows you to retain control of the assets during your (the grantor's) lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the grantor.
You can name yourself trustee (or co-trustee) and retain ownership and control over the trust, its terms and assets during your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death. Although a revocable trust may help avoid probate, it is usually still subject to estate taxes. It also means that during your lifetime, it is treated like any other asset you own.
There are many types of trusts; a major distinction between them is whether they are revocable or irrevocable. Each carries it's own pros and cons.
Revocable Trust: Also known as a living trust, a revocable trust can help assets pass outside of probate, yet allows you to retain control of the assets during your (the grantor's) lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the grantor.
You can name yourself trustee (or co-trustee) and retain ownership and control over the trust, its terms and assets during your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death. Although a revocable trust may help avoid probate, it is usually still subject to estate taxes. It also means that during your lifetime, it is treated like any other asset you own.
Irrevocable Trust: An irrevocable trust typically transfers your assets out of your (the grantor's) estate and out of the reach of estate taxes and probate, but cannot be altered by the grantor after it has been executed. Therefore, once you establish the trust, you will lose control over the assets and you cannot change any terms or decide to dissolve the trust.
An irrevocable trust is generally preferred over a revocable trust if your primary aim is to reduce the amount subject to estate taxes by effectively removing the trust assets from your estate. Also, since the assets have been transferred to the trust, you are relieved of the tax liability on the income generated by the trust assets. It will also be protected in the event of a legal judgment against you.
Common Law Trusts Vs Statutory Trust
Common law trust and statutory trusts have different requirements for filing and operating. Common law trusts are created without public officials and operates in the private. It gives you an even higher level of protection than that of a statutory trust. The individuals of the trust are eligible to legally sue, or be sued, for violating the terms of the common law trust. However, they must do so in their own name.
Common law trust and statutory trusts have different requirements for filing and operating. Common law trusts are created without public officials and operates in the private. It gives you an even higher level of protection than that of a statutory trust. The individuals of the trust are eligible to legally sue, or be sued, for violating the terms of the common law trust. However, they must do so in their own name.
Economically, common law trust are very advantageous because it can provide a high level of protection and privacy, without the legal liability or management cost that could be associated with a statutory trust. The primary function of a common law trust is to protect and secure the asset, not to engage in business activity of any kind. Therefore, it does not need to acquire a bank account or any other public interaction that is required to engage in business.
A statutory trust, on the other hand, is considered to be a juridical category. It is separated from the trusts parties and a legal lawsuit can be initiated in its name. The statutory trust is often regarded as a type of business organization. Statutory trusts must follow a number of rules which include, rules are binding and cannot be overruled in the business documents, it cannot have a donative purpose, there must be an entire document on trusts in the articles of incorporation and there must be a charging order provision included.
A statutory trust, on the other hand, is considered to be a juridical category. It is separated from the trusts parties and a legal lawsuit can be initiated in its name. The statutory trust is often regarded as a type of business organization. Statutory trusts must follow a number of rules which include, rules are binding and cannot be overruled in the business documents, it cannot have a donative purpose, there must be an entire document on trusts in the articles of incorporation and there must be a charging order provision included.
Medical Protection Trust
While one of the primary purposes of an asset protection trust is to protect the settlor's assets from creditors' claims, such a trust can also be used to help make you eligible for Medicaid by reducing the assets in your name. If you are planning to set up a trust for this purpose, it's important to consult with an adviser with experience in this area, as not every trust can help you comply with Medicaid's eligibility requirements.
An asset protection trust can be a vital tool in securing and protecting your property. Because it's crucial that any trust to be set up properly, you are welcome to work with our team of professionals to assist you in the establishment of your trust.
While one of the primary purposes of an asset protection trust is to protect the settlor's assets from creditors' claims, such a trust can also be used to help make you eligible for Medicaid by reducing the assets in your name. If you are planning to set up a trust for this purpose, it's important to consult with an adviser with experience in this area, as not every trust can help you comply with Medicaid's eligibility requirements.
An asset protection trust can be a vital tool in securing and protecting your property. Because it's crucial that any trust to be set up properly, you are welcome to work with our team of professionals to assist you in the establishment of your trust.
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BENEFITS OF A TRUST
The Ultimate Privacy Protection. Today, everything you own and don't own is a matter of public record. That being said, if it's in your personal name, the bulls-eye on your head is easy to see. And the more assets you accumulate. the bigger the target. Since the advent of the internet, getting your personal information, such as where you live, work and even what you own is just a key stroke away for anyone to access.
You may say well, I have nothing to hide, so it really doesn't matter to me what other people may see. This may be true today, but not so much tomorrow when some unscrupulous person or organization may be prying to take your hard earned wealth. Besides, as stated so cleverly in the movie "ANON", "It's not that I have something to hide, there's just nothing I want you to see", just as most people don't want someone to see when their relieving themselves. Not everything is for public consumption.
The Wealthy and Public Officials. Why is it that you do not routinely find a public officials such as police officers, judges, senators or congressmen's information appearing in the public? Because unlike the people they are suppose to serve, they understand the importance of privacy. Respectfully, because they may create enemies while in their position of power, it is best they keep their information as private as possible while attempting to serve the public interest. High profile movie stars, TV personalities and sports figures are just as vulnerable.
Control of Your Wealth. You can specify the terms of a trust precisely, controlling when and to whom distributions may be made. You may also, for example, set up a revocable trust so that the trust assets remain accessible to you during your lifetime while designating to whom the remaining assets will pass thereafter, even when there are complex situations such as children from more than one marriage.
Protect Your Legacy. A properly constructed trust can help protect your estate from your heirs' creditors or from beneficiaries who may not be adept at money management. However, the trust needs to be properly established in order to provide the protection you're looking for. In order to properly protect your property, irrevocable trust are most highly recommended. As its name suggests, once such a trust is created, you cannot revoke it yourself by changing its terms, nor do you have control over the trust's assets. Having a third party neutral trustee allows the external control you may want to change the terms of the trust.
Domestic Protection Trust
There are two kinds of irrevocable trusts that work as asset protection vehicles: domestic asset protection trusts and foreign asset protection trusts. A domestic asset protection trust can be established within the U.S. in any of the states that provide legislation permitting the creation of such trusts.
Note that it is less costly to set up an asset protection trust in the U.S. than it is to create a foreign asset protection trust. Because these trusts are fairly new, the case law concerning their treatment is constantly evolving, which adds a level of uncertainty to their ability to properly protect assets. Most states have a limitation period during which assets transferred into such a trust remain vulnerable to creditors.
Foreign Protection Trust
The foreign asset protection trust, also known as an offshore trust, provides more effective protection for your assets. Such trusts are established in jurisdictions outside of the U.S., such as Panama, which provide more stringent protection for trusts and their assets. Because your trust is in a foreign jurisdiction, it's governed by the laws of that jurisdiction rather than by U.S. laws.
Although they are usually more costly than their domestic counterparts, foreign asset protection trusts generally have more stringent privacy measures, making it harder for others to learn the trust terms and assets. Another benefit is that jurisdictions that promote themselves as offshore trust havens usually do not enforce U.S. judgments against assets of trusts formed in their jurisdiction.
Protect Your Legacy. A properly constructed trust can help protect your estate from your heirs' creditors or from beneficiaries who may not be adept at money management. However, the trust needs to be properly established in order to provide the protection you're looking for. In order to properly protect your property, irrevocable trust are most highly recommended. As its name suggests, once such a trust is created, you cannot revoke it yourself by changing its terms, nor do you have control over the trust's assets. Having a third party neutral trustee allows the external control you may want to change the terms of the trust.
Domestic Protection Trust
There are two kinds of irrevocable trusts that work as asset protection vehicles: domestic asset protection trusts and foreign asset protection trusts. A domestic asset protection trust can be established within the U.S. in any of the states that provide legislation permitting the creation of such trusts.
Note that it is less costly to set up an asset protection trust in the U.S. than it is to create a foreign asset protection trust. Because these trusts are fairly new, the case law concerning their treatment is constantly evolving, which adds a level of uncertainty to their ability to properly protect assets. Most states have a limitation period during which assets transferred into such a trust remain vulnerable to creditors.
Foreign Protection Trust
The foreign asset protection trust, also known as an offshore trust, provides more effective protection for your assets. Such trusts are established in jurisdictions outside of the U.S., such as Panama, which provide more stringent protection for trusts and their assets. Because your trust is in a foreign jurisdiction, it's governed by the laws of that jurisdiction rather than by U.S. laws.
Although they are usually more costly than their domestic counterparts, foreign asset protection trusts generally have more stringent privacy measures, making it harder for others to learn the trust terms and assets. Another benefit is that jurisdictions that promote themselves as offshore trust havens usually do not enforce U.S. judgments against assets of trusts formed in their jurisdiction.
Deciding on a Trust
Depending on what purpose your trust will serve, depends on what State laws may or may not govern in regards to the applicability of your trust. The more private your trust is, if created under the Common Law, the less government intrusion. On the other hand, the more public your trust is, being a creature of statute, the more regulated it will be. Consider the differences between a common law trust and a statutory trust to determine which is best for you. If you need help with choosing common law vs. statutory trust, we can work with you in making the right decision.
Depending on what purpose your trust will serve, depends on what State laws may or may not govern in regards to the applicability of your trust. The more private your trust is, if created under the Common Law, the less government intrusion. On the other hand, the more public your trust is, being a creature of statute, the more regulated it will be. Consider the differences between a common law trust and a statutory trust to determine which is best for you. If you need help with choosing common law vs. statutory trust, we can work with you in making the right decision.
SO WHAT'S THE #1 REASON YOU SHOULD HAVE A TRUST? LAWSUITS! The United States is the most litigious country on earth, and the threat of a lawsuit can affect anyone who owns almost any amount of assets. The more assets you have, the more likely you are to face a lawsuit at some point in your life. In the legal field, this is sometimes referred to as the deep pockets theory — litigants have an obvious preference to legally pursue people who have the means to pay a claim. A lawsuit can come from any direction — from a family member, a neighbor, a former friend, a previous employer, an employee of your business, or an aggrieved party in a business transaction.
More than ever, today anyone who owns property of any kind, whether it's a house, car or business could face the daunting reality of a lawsuit. And because there are so many laws on the books, most, if not all of us have been, or will be either directly or indirectly exposed to a "judgment creditor." If you ever got a parking or traffic ticket and didn't pay it, the party seeking payment is the creditor. Obtaining a judgment against another individual or company is big business in the United States. Attorneys advertise through TV, radio, newspapers, and even on park benches encouraging every one to think of someone they can sue. They even offer a great diversity of ideas at no cost to the plaintiff unless the case is won. Sue for slander, headaches, injury, for lack of disclosure, for disclosing too much as the list goes on and on. In addition to attorneys, there are numerous government agencies that can reek havoc on the lives of families, businesses, and companies
Many individuals have approached us only after administrative and judgment liens have been placed on their homes, bank accounts, and businesses. Although we would like to help and occasionally can, it's usually too late. Your assets are a lot like an egg. The contents are safe and protected until the shell is broken. Once the integrity of the egg is breached, the contents are vulnerable to the adversary, be it a snake or a hostile two-legged pin-stripped suit. We have personally spoken to people whose lives have been shattered, whose homes have been levied upon, whose farms have been seized, and whose businesses have been ransacked from lawsuits and any number of unverified and non-judicial claims. Setting up a Trust, even a simple Trust will help eliminate the possibly of this ever happening to you and your family. And, with us, it will not cost you an arm and a leg to set up or manage.
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