New Jersey residents might be curious to learn what the wealthiest families are doing to protect their assets. Trusts can be used for a variety of purposes, one of which is protecting assets while the parents are still living. Asset protection trusts are trust funds that specifically allow people to protect their assets while they are alive.
Asset protection trusts are sometimes referred to as self-settled spendthrift trusts. They are irrevocable trusts that allow the creator of the trust to be the beneficiary. The trustee of the trust is a third party, and the terms of the trust restrict distributions to the beneficiary. These types of trust funds can be used as wealth protection tools and oftentimes are by the wealthiest families in the nation. Because the third party trustee becomes the legal owner of the trust’s assets, any claims wages against the owner of the trust will not reach the trust’s assets, thereby protecting the assets from any claims.
It is important to note that these types of trusts are not allowed in all jurisdictions, so people should check with the laws of their state before attempting to set up asset protection trusts. Additionally, there are numerous factors that people must consider when setting up such trusts such as how much money they need to live on, what resources they need to set up the trusts and what liabilities and possible claims they foresee being waged against them in the future.
Estate administration lawyers might be able to assist people with their estate planning process. They could help them establish the appropriate types of trust funds to fit their needs as well as help them with other aspects of estate planning like creating wills and naming beneficiaries.
Source: Forbes, “What Are The Wealthiest Families Doing About Asset Protection? Part 3“, Todd Ganos, October 05, 2013