Not everyone is familiar with asset protection trusts, and not everyone may be able to get one. There are a lot of questions that could arise about this type of trust, and the more you know, the more you’ll be able to make an informed decision about having one created for you. The following are four common questions and answers to help you understand.
What Is an Asset Protection Trust?
As the name suggests, an asset protection trust is an agreement designed to protect your assets. This could be against a lawsuit, against consequences of death, and against other legal or similar issues. When you place your assets in a trust, they become owned by the trust. Depending on the type of trust you have written up, you may or may not be able to make changes to the documents at all.
Which Jurisdictions Allow Asset Protection Trusts?
There are only a handful of jurisdictions that allow asset protection trusts to be created. This includes Tennessee, Utah, Virginia, Wyoming, Missouri, Hawaii, Delaware, Alaska, New Hampshire, South Dakota, Ohio, Rhode Island, and Oklahoma. If you live in one of these states, you should speak with an attorney about drafting a trust. If you live outside these states, you should speak with an attorney about some of the other options you have.
Who needs an Asset Protection Trust?
Anyone with assets could benefit from an asset protection trust. This includes homeowners who live paycheck to paycheck, as well as wealthy real estate developers who have cash falling out of their pockets. Many individuals in higher risk occupations are more likely to consider a trust, and those who are extremely wealthy may have already dealt with situations that posed a risk to their assets, and may have, therefore, begun the process of creating a trust already.
Do Asset Protection Trusts Affect Taxes?
There are some situations that could reduce state income taxes for a certain individual who has an asset protection trust, though this isn’t the general rule. It’s also important to note your trust requires a separate income tax return, so you’ll need to be sure that gets filed each year, in addition to your own personal taxes or business taxes.
An asset protection trust can be something that benefits you and your family members, whether it’s financially or emotionally. If you are interested in learning more about this type of trust, contact an attorney, like an estate attorney from Klenk Law, today with all your questions.