One of the most common myths that exists about trust asset protection is that it is something that only the very wealthy need to worry about. In reality, many different types of individuals should consider using trusts to protect a person’s assets. Asset protection trusts are one of the best ways that individuals can protect their assets from creditors in addition to many other advantages including tax benefits. This article will review some of the important advantages that are offered by trusts as part of estate planning in the state of New York.
The Basic Structure of Trusts
While there are some significant differences between types of trusts, each trust involves three parties: a beneficiary, a trustee, and a settlor. A beneficiary is the party that receives the assets or valuable items that are placed within the trust. A settlor is the person that is tasked with making periodic contributions into a trust. A trustee is the individual that is responsible with disbursing assets from, managing, or overseeing assets that are placed within a trust.
The exact steps regarding how a trust is managed are listed within a trust agreement. A trust that is properly executed operates in a manner similar to a will that is executed after the creator’s death. The trustee is required to follow the terms that are listed in the trust agreement. Additionally, there are other requirements that must be followed by trustees.
The Role of Living Trusts
Living trusts are the type of trusts that are most commonly used for the purposes of estate planning. The two main types of living trusts include irrevocable and revocable trusts. While assets located in revocable trusts can be take back at any time during the trust creator’s life, irrevocable trusts prevent a trust creator from performing this activity.
There are some important benefits of using a living trust. These trusts allow individuals to make sure that adequate asset administration occurs in case the creator becomes incapacitated. Because modern technology has created some significant advancements in technology, it is increasingly more common that individuals reach the point of age that their mental or physical capacity decreases so much that the individual is left unable to manage their own affairs.
Trusts also allow individuals to avoid probate, which allows individuals to avoid losing a significant amount of money. While wills must be filed in a court before any administration of the deceased individual’s assets occur, living trusts allow the assets that are placed within a trust to be distributed directly to heirs. Not only is avoiding probate cheaper, however, it also assets in a trust to be distributed much more quickly in many cases.
Speak with a Seasoned Asset Protection Attorney
These are just some of the largest advantages that exists in asset protection trusts. If you or a loved one is interested in an asset protection trust, it can help to speak with a knowledgeable estate planning attorney.