What Types of Trusts and Business Entities Should I Use in My Asset Protection Plan?
It really depends on what type of asset you are trying to protect. While there are many special and purpose-built trusts, and types of business entities, your foundational document should be a revocable living trust. Properly designed and funded, a revocable living trust will protect against the costs and delays of probate, both while you are living and after you’re gone.
Next, an effective asset protection plan should include one or more irrevocable trusts. Different trusts can be used to protect different assets. Real estate, life insurance, investments and high value personal property can all be protected in one or more trusts. Remember though, when you create and transfer assets into an irrevocable trust, you must give up a certain amount of control over the asset. How much control you must give up depends a great deal on the type of trust you create and who you name as trustee.
The key person in any irrevocable trust is the trustee you name to administer the trust. The trustee has total control over the administration of the trust including signing all the documents, managing the investments inside of the trust and managing the amount and timing of the distributions. The trustee can be a family member, a professional or an institution like a bank. You can name one trustee or your can name more than one to provide some checks and balances. Your choice of trustee is critical, as well as the ability to remove and replace that trustee in the future.
Finally, you should consider one or more limited liability companies (LLC) as well as a family limited partnership (FLP) to provide ultimate protection for your assets. LLCs and FLPs can be formed in any state and each state has its own nuances to consider. Beware, though! Some states like Wyoming and Nevada have excellent asset protection laws, while states like Colorado do not.
For more information on Trusts and Business Entities Used In Asset Protection Planning, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (719) 627-5955 today.