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Shivers Law Group

What is an asset protection trust?

On Behalf of | Oct 24, 2023 | Estate Planning

When it comes to managing your assets and planning for the future, there are various strategies you can choose for protecting your wealth. The primary concern, of course, is to ensure the distribution of your assets according to your wishes.

One such strategy is the use of asset protection trusts. These trusts can be valuable tools in estate planning, offering a layer of protection for your assets against potential risks.

What is an asset protection trust in estate planning?

An Asset Protection Trust is a legal entity that holds and manages your assets. It ensures protection from creditors, legal claims and other potential threats. The primary purpose of an APT is to shield your assets from external challenges while preserving them for the benefit of your chosen beneficiaries.

What are the key elements of an asset protection trust?

When you establish a trust and place assets into it, you are the grantor. The other key parties in an APT are the trustee who manages the trust after your passing and the beneficiaries who eventually receive the assets. Irrevocability is another notable feature of an APT, ensuring that the grantor cannot withdraw assets placed into the trust.

Are there tax benefits of an asset protection trust?

APTs can offer potential tax advantages, as they can reduce the taxable estate. This means that the overall estate tax liability may be lower, allowing more of your wealth to pass on to your beneficiaries.

Surveys show that as many as 67% of Americans have no estate plan. Of those that have an estate plan in place, many of them only have a simple will. Taking the extra step to add an asset protection trust to your end-of-life planning can make a significant difference for your family.