An Asset Protection Trust is a trust formed in a foreign jurisdiction which can be utilized to shelter an individual’s assets from claims of future creditors.

While an Asset Protection Trust may, sound very attractive at first, it is important to consider risks involving the establishment of such a trust. It is because of these risks in creating or using the trust when the individual is insolvent that some people have the impression that Asset Protection Trusts are designed for people who do not need them. Often an Asset Protection Trust is used where a person would otherwise consider the using a domestic trust as part of their estate planning.

Here are conditions where Asset Protection Trusts should be considered:

If the objective of estate or wealth planning is preserving assets built up by the individual. A person may consider using an Asset Protection Trust rather than a domestic trust in the following situations:

Excessive liability insurance costs for professionals, directors, environmental matters, etc.

The Settlor desires to preserve assets from the risk of insolvency from the likelihood of risky business ventures

The possibility that a dependent or spouse could make a claim against a Settlor's estate contrary to his express directions in a will or other testamentary document;

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.