An asset protection trust is a financial term that covers a wide range of different legal concepts. Basically, asset protection trust is another term for a discretionary trust. In a discretionary trust, property is held in trust by a trustee, to be transferred to the recipient (the beneficiary). It is called a discretionary trust because the property is released to the beneficiary at the "discretion" of the trustee—that is, according to their own judgment rather than according to a fixed condition.
Most asset protection or discretionary trusts do however contain certain guidelines that the trustee is to follow regarding the property distribution. This will help provide protection for the property owner, as well as for the property itself.
What Are Some Benefits of Asset Protection Trusts?
Thus, asset protection trusts can be beneficial and are associated with a number of different advantages, such as:
- Provide the trustee with a greater amount of control and decision-making regarding property distributions
- Protect against waste by the beneficiary
- Protect against unwise spending or investing by the beneficiary
- Help the property owner to maintain records of their property distributions
- In most instances, the property is no longer considered taxed under the person’s estate once it is transferred to a trust
For instance, if the beneficiary is younger, the asset protection trust might contain instructions for the trustee to make the distributions at a later period in time. This will help avoid common pitfalls such as overspending, which is common amongst younger beneficiaries. Also, some asset protection trusts offer various tax incentives and benefits.
What If I Have a Dispute Over an Asset Protection Trust?
Some common asset protection dispute trusts may involve:
- Persons claiming that they are beneficiaries to the same property
- Violations of trustee duties
- Illegal or unauthorized transfers of trust property
These types of disputes are often resolved through the filing of a lawsuit. In most cases, the court will order a damages award to help the plaintiff party recover losses. In some instance, the court may order the property to be transferred to a specific person or party. This all depends on the facts in each dispute.
Should I Hire a Lawyer for Help with an Asset Protection Trust?
There are many different types of asset protection trusts, each with their own distinct characteristics and features. You may need to hire an estate lawyer if you need assistance creating or revising a trust arrangement. Also, you may consult an experienced attorney near you if you need to file a lawsuit due to a trust dispute. Your attorney can represent you in court so that you can recover damages or obtain other similar legal remedies.