Trusts are a great tool to manage your personal assets or you want to keep control over the way in which your assets will be distributed upon your death. Asset protection trusts are useful to protect all your personal assets, as well as your professional assets, from possible creditors. It is an extremely safe method to use to plan your wealth goals.
Trusts are regarded as legal entities which hold assets for the benefit of another entity. It contains three active parties. The trustor or grantor is the one who creates and funds the trust. The beneficiary is the one who will gain from it. The trustee administers it and is duty-bound to act in the best interests of the beneficiary.
A trust is created by the execution of a legal document known as a trust agreement. This agreement names the beneficiary and the trustee. It also contains instructions related to what the beneficiary will receive. It lists the trustee’s duties and when the trust will end, among other considerations.
The trust may contain any type of asset, including bonds, real estate and stocks. Your reasons for implementing the entity will be the determining factor as to what is placed in it. For example, you may want an entity that is useful for the payment of taxes and other estate duties or for the financial provision of your family when you die. In these cases, it may be necessary to add real estate or a life insurance policy to the entity.
There are many reasons why people make use of these entities. Some of the reasons for this are to minimize estate taxes, protect assets from possible creditors and to preserve assets. You may want to move assets to individuals who fall into a lower income tax bracket. If you want to ensure that your assets remain in your hands, you may consider an asset protection entity.
This type of entity is an irrevocable unit which will offer protection of your assets from creditors. To establish it, you have the right to transfer a range of assets to it. As soon as all the assets have been transferred, it gains protection from future debt collectors.
You will have some form of control over the assets that are placed within the entity. As the trustor or grantor, the law allows you to direct the manner in which the assets are invested. You will be allowed to receive income from it and determine how distributions are provided to third parties.
To offer adequate protection for the assets placed, you may not be able to gain full control over the assets. This does not imply that all control will be lost over the benefits derived from the property which you have transferred.
You should consult an attorney to find out about the various types of entities. A trust which you refer to in your will is called a testamentary entity. You can make use of a living trust while you are alive. If you wish to have the facility to amend or cancel the entity, you will obtain a revocable version, or if you do not want this facility, an irrevocable entity. Your choice will be wholly dependent on what you currently require and may require in future.
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