Trusts are established as a part of estate planning by many people in upstate New York. Trusts can create financial legacies for surviving loved ones, and some use them to minimize estate taxes. Individuals who are concerned about legal action to attach some of their assets have additional options in the form of asset protection trusts.
A revocable living trust is used to protect assets to be passed on to beneficiaries like a spouse, children and others. The person drafting the trust can manage and change it during his or her lifetime. In contrast, an asset protection trust is irrevocable. Transferring assets into an irrevocable trust make the trust the owner of the funds, managed by a trustee and not changeable.
An asset protection trust is established with a specific function in mind, such as shielding and protecting assets against claims by creditors. Once funds are placed into an asset protection trust, the individual no longer owns the them as they are owned by the trust. Creditors cannot attach funds held by the trust. Any action by creditors must be aimed at personally-owned assets by the debtor for a court judgment to recover owed debts.
Asset protection trusts come in different forms, including domestic and foreign asset protection trusts. They are also subject to state laws. An experienced estate planning attorney in New York can provide information about the available options when it comes to trusts. Legal counsel can assess the client’s circumstances and needs and suggest suitable ways to proceed to satisfy the estate planning needs and wishes of the client.