Protecting Assets from Creditors
How do you protect your assets from those who might want to try to take them from you or from someone you love? In addition to making sure that you have appropriate insurance in place, you may want to consider an Asset Protection Trust. While the Fraudulent Transfers Act makes it difficult to protect your assets from presently known creditors who have legitimate claims by transferring them to a third party, a properly drafted and funded asset protection trust can go a long way toward protecting your assets from potential future creditors and from presently existing creditors who do not act in time. By statute, Utah recognizes asset protection trusts as irrevocable trusts in which the “settlor” (the person who places assets into a trust) is also a “beneficiary” (a person who receives benefits from those assets) of the trust. To qualify as “irrevocable” the trust document must make it clear that the settlor cannot unilaterally change or dissolve the trust, nor can the settlor generally remove assets from it. The settlor may, however, serve as a co-trustee of the asset protection trust, subject to certain limitations, and may change or dissolve the trust, or remove assets from it, if another substantial beneficiary of the trust, whose interest would be adversely affected, approves the change to or dissolution of the trust, or the removal of the asset(s) from it. Distributions from the trust to the settlor may also be made in the discretion of someone, such as a trustee, who is not the settlor, or according to certain permissible standards set out in the trust document.
In addition to asset protection trusts, a properly drafted “spendthrift trust” can preserve assets for minor children or someone with diminished capacity, and a so-called “special needs trust” can provide money to enhance the life of a person with a serious disability without disqualifying him or her from the government disability and health care benefits that he or she will likely need for life. Properly structured limited liability companies and family limited partnerships can also help here.
Call us today at 801-505-5600 to learn more about how our Salt Lake City, Utah-based trust, estate and probate attorneys at J.D. Milliner & Associates, P.C. can help you create an estate plan that will help protect and preserve your assets from creditors!
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