Asset Protection Trusts: Guidelines for Efficient Integration

One of the most popular approaches to estate planning has to do with safeguarding assets against possible losses. Asset protection trusts are one common way to protect property for you and your beneficiaries. shutterstock_120265729

Asset protection trusts refer to irrevocable trust structures in which a trustee holds property and distributes it out under his or her discretion. The trust protects the assets from being exposed to risk through divorce, a beneficiary’s creditors, or other predators in the future. There are two primary categories for asset protection trusts: third party trusts and self-settled trusts. As the name suggests, a third party trust involves a trust being set up by one party to benefit another whereas a self-settled trust is established by one party for his or her own benefit.

Passing on assets to children or grandchildren these days could potentially be risky in such uncertain times, what with bankruptcies, lawsuits, and divorces all possible. Asset protection trusts can also guard against another common client concern: that a beneficiary will blow through all the money too quickly. In cases where a beneficiary develops a disability later in life, without proper planning this beneficiary may have to spend a large sum to support the needed care while also being disqualified for medical benefits.

These situations call for third-party trusts such as:

  • Trusts for the benefit of adult beneficiaries- This is ideal for those who are not good or comfortable with managing money, those who may get divorced in the future, or those who have an addiction problem.
  • Trusts for the benefit of minors- Since minors can’t legally accept an inheritance, this can be a way to provide assets in the future.
  • Trusts for the benefit of disabled individuals- A large inheritance could disqualify someone from government benefits while forcing them to spend through the assets they receive.
  • Trusts for surviving spouses- This is a popular option if you are concerned that your spouse will remarry or will be unable to manage the inheritance properly.

Consider the flexibility offered in these kinds of trusts and contact our office today for more information. Send us a message at


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