Awareness surrounding the importance of asset protection soared during the COVID–19 pandemic. In particular, the Law Office of Inna Fershteyn saw a significant increase in clients who requested legal assistance with the intention of creating an asset protection plan. An Asset Protection Trust will ensure that your assets are protected from creditors. Pandemic aside, it is important to protect assets against any unprecedented or extreme circumstances. An experienced and well knowledged estate planning attorney will help explain the different options available and determine the best one for you.
Asset Protection in an Irrevocable Trust
The most popular and effective way to protect your assets is to create an irrevocable trust. Once this trust is created, you cannot revoke the terms on which it was set forth. You also relinquish control of the trust’s assets. Control of the assets is transferred to the trustee, the person who is legally responsible for managing the trust, and all changes/distributions are left to their judgement. In the event that a creditor files a lawsuit against an individual, the assets they transferred to the trust will no longer be considered theirs. As a result, in the event that a creditor wins the lawsuit, an irrevocable trust provides the highest level of reassurance that all covered assets will be protected.
Foreign Asset Protection Trust
This trust, also known as an offshore trust, provides effective coverage over an individual’s trusts. This form of protection is generally established outside of U.S. territory and entails strict protection over included assets. It is important to note that since the trust is created abroad, its assets are governed by the laws of the territory in which it is drafted. Therefore, before creating a foreign asset protection trust, an individual must obtain a well-rounded knowledge of the laws by which their assets are ruled and the jurisdiction they may face if they are sued.
Foreign asset protection trusts are more expensive than domestic trusts, but ultimately bear higher protection. Additionally, offshore trusts usually do not enforce U.S. jurisdiction on their territory. Assets are held in an offshore account that protects against a U.S. court-ordered seizure. However, this trust is also vulnerable to any economic or political downfalls that may occur on the territory in which it is created.
Medicaid Asset Protection Trust
In addition to protecting assets from creditors, a trust can also be drafted to help an individual become Medicaid eligible. A trust will reduce the assets under an individual’s name and transfer control to another named individual. It is best to consult an experienced attorney when transferring assets for this purpose to make sure that all actions are legal and will result in Medicaid eligibility.
As people become more well-informed on the importance of an asset protection plan, its demand rises. It is a step in the right direction when planning an estate and should be discussed with loved ones when selecting a trustee. Hiring an experienced estate planning attorney will aid in discussing all trust options at length and calculating which one best suits your needs. For all of your estate planning needs, please contact the Law Office of Inna Fershteyn at (718) 333–2394.