Asset Preser­va­tion, Asset Pro­tec­tion, Asset Trust

To learn more about Asset Pro­tec­tion we pub­lished an Asset Pro­tec­tion 101 in the form of both a down­load­able PDF direct­ly under­neath and a FAQ fur­ther down the page.



Once con­vinced that Asset Pro­tec­tion is what you need and want, please choose one of the three cus­tomized pdf forms below, that best describe your sit­u­a­tion. You can down­load the appro­pri­ate form, print it, fill it out and then mail, fax, or scan and email it back to us.

Fre­quent­ly Asked Questions

Gen­er­al Questions

Plan­ning is sim­ply a name for the process of trans­fer­ring prop­er­ty and assets from one gen­er­a­tion to anoth­er. An “Estate” is the total prop­er­ty and assets owned by an indi­vid­ual or cou­ple pri­or to dis­tri­b­u­tion through a Will or Trust. Many peo­ple assume that “Plan­ning” is only for the rich, but this is a big mis­con­cep­tion. Plan­ning is for every­one; there are no min­i­mum asset require­ments. Many peo­ple do not think that they have enough assets to jus­ti­fy plan­ning, but if they have ANY prop­er­ty or assets, there are plan­ning con­cerns. Plan­ning is espe­cial­ly impor­tant if there are minor children.
Most peo­ple put off plan­ning because it involves more than list­ing what assets are owned and who is to receive those assets when some­one pass­es away. Plan­ning involves atti­tudes and feel­ings about death, prop­er­ty ownership,business arrange­ments, mar­riage and fam­i­ly rela­tion­ships. Adult chil­dren will often put off talk­ing with their par­ents about their estate because they do not want to appear greedy, or because they can­not imag­ine a time with­out their par­ents. Par­ents may also avoid talk­ing to their adult chil­dren about estate plan­ning because they do not want to hurt feel­ings, or they tru­ly are not aware of all the options that are avail­able to them. Although it may be uncom­fort­able talk­ing about these things, it is worth spend­ing some time and mon­ey to avoid the con­fu­sion, delay, expense and quar­rel­ing that is almost sure to occur if some­one dies with­out a plan. If a plan is not made, state law will decide what hap­pens to the estate, regard­less of what the deceased may have intended.
The best time to start plan­ning is NOW…before it is too late! With plan­ning there is no sec­ond chance. No one likes to think about their own mor­tal­i­ty or the pos­si­bil­i­ty of becom­ing inca­pac­i­tat­ed. This is exact­ly why so many fam­i­lies are caught off guard and unpre­pared when inca­pac­i­ty or death strikes. If there are assets, includ­ing bank accounts, bro­ker­age accounts, life insur­ance, retire­ment accounts, minor chil­dren, or equi­ty in your home, now is the time to start planning.

Do I need an irrev­o­ca­ble asset pro­tec­tion trust?

An Asset Pro­tec­tion Trust is a legal doc­u­ment that allows an indi­vid­ual or cou­ple to give up per­son­al own­er­ship of real prop­er­ty and/or assets (such as a home, real estate, bank accounts, cer­tifi­cates of deposit, secu­ri­ties, life insur­ance, stocks, bonds, etc.) and trans­fer them into the legal own­er­ship of the trust. This type of trust also allows the grantors (the indi­vid­ual or cou­ple set­ting up the trust) to decide who will man­age their assets, and when, where and how the assets will be dis­trib­uted. If an Asset Pro­tec­tion Trust is set up cor­rect­ly and all of the prop­er­ty and assets are prop­er­ly trans­ferred to the trust it will pro­vide the fol­low­ing ben­e­fits: Pro­vide lia­bil­i­ty pro­tec­tion, avoid pro­bate entire­ly; dis­trib­ute prop­er­ty and assets to the ben­e­fi­cia­ries as spec­i­fied in the trust; and save mon­ey in fed­er­al estate tax and cap­i­tal gains taxes.
The trustee han­dles the busi­ness affairs and dis­tri­b­u­tion of the estate dur­ing the grantors life and after the grantors death. The trustee could be one or more peo­ple and is usu­al­ly a trust­ed friend or fam­i­ly mem­ber. The trustee will man­age the assets in the trust dur­ing the life­time of the grantors. After death, the trustee will dis­trib­ute the assets to the named ben­e­fi­cia­ries in the trust. Before select­ing a trustee, the respon­si­bil­i­ties need to be dis­cussed with the indi­vid­ual or cou­ple to see if they are will­ing and able to per­form these duties. It is also a good idea to name a suc­ces­sor trustee if, for any rea­son, the first choice can­not serve.
One huge advan­tage of an Asset Pro­tec­tion Trust is the con­trol that the grantors have on when, where and how the assets are to be dis­trib­uted. For exam­ple: If a John and Jane Doe do not want their ben­e­fi­cia­ries receiv­ing an out­right dis­tri­b­u­tion of the assets until they reached the age of 25, this could be stip­u­lat­ed in a Trust. This does not mean that the ben­e­fi­cia­ries can­not use the mon­ey until they are 25, it sim­ply means that the trustee(s) will be man­ag­ing those assets until the ben­e­fi­cia­ries reach the age of 25. Pri­or to reach­ing the age of 25, the assets may be used for health, education,maintenance and sup­port. In a Trust, the ben­e­fi­cia­ries are the peo­ple and/or orga­ni­za­tions to which the assets are left. Most peo­ple have a pret­ty good idea of who their direct ben­e­fi­cia­ries will be. Ben­e­fi­cia­ries may be chil­dren, grand­chil­dren, oth­er fam­i­ly mem­bers, friends, charities,organizations, etc. Cou­ples in sec­ond, or sub­se­quent mar­riages may face more com­pli­cat­ed deci­sions if there are chil­dren from a pri­or marriage.
Yes! Because the trust is irrev­o­ca­ble, and because the grantors are trans­fer­ring assets to the trust at a time and in a man­ner that is not a fraud­u­lent trans­fer, cred­i­tors have no claim against the trust assets. Addi­tion­al­ly, the trust is not filed any­where, so cred­i­tors can­not find this struc­ture through a search of pub­lic records under the grantor’s name. Because the grantors have no own­er­ship, the assets are not includ­ed among their assets for pur­pos­es of bank­rupt­cy, fed­er­al tax liens, Med­ic­aid eli­gi­bil­i­ty, or any oth­er pur­pose. Note that every state has their own Med­ic­aid eli­gi­bil­i­ty require­ments. Please check with your state’s eli­gi­bil­i­ty require­ments. The asset pro­tec­tion is based on legal prin­ci­ples that are well estab­lished in all fifty states, and have not changed for hun­dreds of years.
This struc­ture can own almost any type of asset. Qual­i­fied assets “tax deferred assets”such as a 401k or IRA can­not be trans­ferred into an Asset Pro­tec­tion Trust; how­ev­er, most qual­i­fied assets already have some lia­bil­i­ty protection.
Because the grantors have no own­er­ship in the trust, their assets are not includ­ed on their per­son­al finan­cial state­ments or in any dis­clo­sure of their assets.
Pro­bate is the legal process to deter­mine who should receive a per­son­’s prop­er­ty and assets at death. It is the only way to legal­ly change the title of prop­er­ty when the own­er has passed away. Pro­bate oper­ates accord­ing to state law and can be a com­pli­cat­ed and expen­sive process. The AARP esti­mates that the aver­age pro­bate cost is 3–8% of a person’s estate and lasts about nine months to two years. Not all assets a per­son owns are sub­ject to pro­bate. The fol­low­ing assets are not sub­ject to pro­bate as long as the named ben­e­fi­cia­ry is alive, over the age of eigh­teen (18) and com­pe­tent: bank accounts, bro­ker­age accounts, life insur­ance poli­cies and retire­ment accounts (Pen­sions, 401(k), IRA (Indi­vid­ual Retire­ment Accounts), Annu­ities, etc.). How­ev­er, many assets such as real prop­er­ty, stocks, and accounts with improp­er or incom­plete ben­e­fi­cia­ry des­ig­na­tions may be sub­ject to pro­bate. If an Asset Pro­tec­tion Trust is set up cor­rect­ly and all of the prop­er­ty and assets are prop­er­ly trans­ferred to the trust…it will avoid probate.
Because of the spe­cial pow­er of appoint­ment includ­ed in the trust, the terms,conditions, and ben­e­fi­cia­ries can be changed at any time.
This struc­ture cre­ates no extra tax returns or income tax prob­lems and there is no require­ment for a sep­a­rate Tax ID Num­ber – it is income tax neutral.
The grantors can put their pri­ma­ry res­i­dence in the trust with­out los­ing any of the tax ben­e­fits of home own­er­ship. If they do put their pri­ma­ry res­i­dence in the trust, they should pay rent to live in the home. The rent is not deductible to them or income to the trust because for tax pur­pos­es, the enti­ty is ignored. The rent explains how they can live in a home they don’t own.
Because gifts to the trust are “incom­plete” for gift tax pur­pos­es, the client can trans­fer unlim­it­ed amounts to the trust with­out gift tax impli­ca­tions. Because gifts to the trust are “incom­plete” for gift tax pur­pos­es, the client’s estate receives a step-up in basis to the fair mar­ket val­ue on the date of the client’s death.
The trust is an eli­gi­ble share­hold­er of an S corporation
After the client’s death, this struc­ture can con­tin­ue to pro­vide asset pro­tec­tion for the client’s ben­e­fi­cia­ries as long as they want to keep it around.

Oth­er Documents

Sched­ule A is an inven­to­ry of assets and set of instruc­tion let­ters that indi­cate how to trans­fer prop­er­ty and assets to the Trust. Once the prop­er­ty and assets have been prop­er­ly trans­ferred to the Trust, ver­i­fi­ca­tion and con­fir­ma­tion of the trans­fers should be kept in Sched­ule A. When the grantors pass away, the trustees will use Sched­ule A to quick­ly locate assets and prop­er­ty. It is very impor­tant to keep Sched­ule A cur­rent and up to date.
Even when some­body cre­ates a Asset Pro­tec­tion Trust, they will still need a “Pour-Over” Will. The Pour-Over Will is a doc­u­ment that states that if some­thing was left out of the Trust, it should be “Poured Over” and dis­trib­uted through the Trust. For exam­ple: John and Jane Doe cre­ate a Trust and trans­fer all their prop­er­ty and assets to the Trust using the instruc­tion let­ters in Sched­ule A. Five years down the road they decide to pur­chase a sec­ond home. When they pur­chase the home, they pur­chase the prop­er­ty as joint ten­ants and for­get to trans­fer the prop­er­ty to the Trust. When both John and Jane Doe pass away, the prop­er­ty that was left out of the Trust would have to go through pro­bate before it could be dis­trib­uted. The Pour-Over Will would help in the pro­bate process to make sure that the prop­er­ty was dis­trib­uted through the Trust. To avoid pro­bate, it is impor­tant to trans­fer ALL assets into the Trust.
Inca­pac­i­ty is a lack of phys­i­cal or men­tal abil­i­ties that results in a per­son­’s inabil­i­ty to man­age his or her own per­son­al care, prop­er­ty or finances. A thor­ough plan should take this pos­si­bil­i­ty into account. It is very impor­tant to plan for inca­pac­i­ty by prepar­ing a few sim­ple legal doc­u­ments to ensure that med­ical and finan­cial wish­es are car­ried out if an indi­vid­ual is unable to speak and act on their own behalf. These legal doc­u­ments are a Liv­ing Will, Med­ical Pow­er of Attor­ney and Durable Pow­er of Attorney.
A Liv­ing Will is a writ­ten state­ment of wish­es con­cern­ing the use of extra­or­di­nary med­ical treat­ment or arti­fi­cial nutri­tion and flu­ids to keep an indi­vid­ual alive if there is no rea­son­able hope of recov­ery from a ter­mi­nal ill­ness or acci­dent. A Liv­ing Will gives med­ical per­son­nel per­mis­sion to with­hold or with­draw life sup­port sys­tems that will mere­ly delay death. If an indi­vid­ual does not have a Liv­ing Will, their fam­i­ly is left with the deci­sion and they may not be able to agree on what action to take. By hav­ing a Liv­ing Will, it allows the indi­vid­ual to make the decision.
A Med­ical Pow­er of Attor­ney is a doc­u­ment that allows some­one else to make med­ical deci­sions for an indi­vid­ual if they can­not make them on their own behalf. The appoint­ed health care agent may be any com­pe­tent per­son who is at least eigh­teen (18) years old and not pro­vid­ing paid health care to the indi­vid­ual. This per­son is usu­al­ly a trust­ed fam­i­ly mem­ber or friend. The Med­ical Pow­er of Attor­ney becomes effec­tive when an indi­vid­ual is unable to com­mu­ni­cate their wish­es due to any ill­ness or injury.
A Durable Pow­er of Attor­ney is a doc­u­ment that allows some­one else to make finan­cial deci­sions for an indi­vid­ual if they can­not make them on their own behalf. The appoint­ed agent called the attor­ney-in-fact may be any com­pe­tent per­son who is at least eigh­teen (18) years old. This per­son is usu­al­ly a trust­ed fam­i­ly mem­ber or friend. The Durable Pow­er of Attor­ney becomes effec­tive when an indi­vid­ual is unable to man­age their own legal or finan­cial affairs, as deter­mined in writ­ing by two unre­lat­ed physicians.
We are a ser­vice office for the attor­ney and legal team para­le­gals that do the actu­al draft­ing of doc­u­ments and assist in keep­ing your cost down. We can assist with ques­tions and get you start­ed on the cor­rect path to sav­ing mon­ey and pro­tect­ing what you have worked hard for.