How to Protect Liquid Assets
Decide which trust is right for you., Hire an experienced attorney., Choose a trustee., Draw up the trust documents., Execute your trust documents., Transfer your assets into the trust.
Step-by-Step Guide
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Step 1: Decide which trust is right for you.
Asset protection trusts traditionally are established offshore.
However, a number of states have passed laws that enable asset protection trusts to be created.
These domestic asset protection trusts are subject to strict guidelines that vary by state.Offshore trusts can be tricky – particularly if you have no continual ties to the country where you set up the trust.
Domestic asset protection trusts, however, can burn you if you choose the wrong state or don't set them up correctly.
Some trusts must be irrevocable, while other states and countries allow you to set up a revocable trust that you can change or close at any time.
Which type of trust you want, and the location where you want to establish your trust, will vary depending on your needs in protecting your assets. -
Step 2: Hire an experienced attorney.
You can set up a basic living trust on your own, using forms and templates that are readily available online.
Asset protection trusts, however, are governed by complex laws and regulations.The level of complexity means hiring an attorney is your best bet to ensure that your trust is established correctly to achieve the purpose for which it is intended.
Depending on the type of trust you want to create, you may need to hire an attorney located in that state or country.
A local attorney can help you determine if you need to hire somebody in the place where your trust will be established.
If you already have a financial advisor, you may want to ask them if there are attorneys they recommend to help you set up an asset protection trust.
They may be able to give you some names to get started. , Asset protection trusts often have an attorney or a finance professional who serves as the trustee.
While in some cases you may be able to serve as trustee of your own trust, some state laws don't allow it.If you're establishing a domestic asset protection trust, the law in that state describes the person qualified to act as trustee.
Often this person must have specific financial licenses or expertise.
In many states, your trustee must be a resident of the state in which you establish the trust.
This is often true for offshore trusts as well.
Keep in mind that if you're able to serve as trustee of your own trust, it may no longer provide the same level of asset protection that it would if you had an independent trustee. , Asset protection trusts must include specific clauses and language to adequately protect the assets you hold in them.
Your attorney will draft the documents for you and go through them to ensure you understand everything.In its most basic form, asset protection trust documents are similar to the documents required to establish any other trust.
Your documents will contain language to establish the trust, identify the trustee, and list the assets included in the trust.
You also must name beneficiaries of the trust.
Typically people name their children or grandchildren as beneficiaries of their trust.
Keep in mind that if you protect your liquid assets using an asset protection trust, you will lose some access and control over the assets in the trust. , Once your trust documents are finalized, you must sign them to create the trust.
The execution formalities vary depending on where you've chosen to set up the trust.Typically, your signature must be notarized.
You also may need additional witnesses.
Depending on the location where you're establishing your trust, you may need to sign multiple copies of your trust documents.
In some states, you may have to travel to the state to actually execute your trust documents and establish your trust.
The same is true for some offshore trusts. , Once your trust is created, you must take all the liquid assets you want the trust to protect and transfer them into the name of the trust.
This may require opening bank accounts in the name of the trust.If your trustee is a financial institution, they may create deposit accounts for your trust within their institution.
Otherwise, you'll have to open an account in the name of the trust.
This typically means you also must request an employer identification number (EIN) from the IRS for your trust.
You can request an EIN free of charge online at the IRS's website by answering a few questions.
The EIN for your trust will be issued immediately.
In some states, the account in which you deposit the trust's liquid assets must be located within that state.
This also is true for many offshore trusts. -
Step 3: Choose a trustee.
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Step 4: Draw up the trust documents.
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Step 5: Execute your trust documents.
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Step 6: Transfer your assets into the trust.
Detailed Guide
Asset protection trusts traditionally are established offshore.
However, a number of states have passed laws that enable asset protection trusts to be created.
These domestic asset protection trusts are subject to strict guidelines that vary by state.Offshore trusts can be tricky – particularly if you have no continual ties to the country where you set up the trust.
Domestic asset protection trusts, however, can burn you if you choose the wrong state or don't set them up correctly.
Some trusts must be irrevocable, while other states and countries allow you to set up a revocable trust that you can change or close at any time.
Which type of trust you want, and the location where you want to establish your trust, will vary depending on your needs in protecting your assets.
You can set up a basic living trust on your own, using forms and templates that are readily available online.
Asset protection trusts, however, are governed by complex laws and regulations.The level of complexity means hiring an attorney is your best bet to ensure that your trust is established correctly to achieve the purpose for which it is intended.
Depending on the type of trust you want to create, you may need to hire an attorney located in that state or country.
A local attorney can help you determine if you need to hire somebody in the place where your trust will be established.
If you already have a financial advisor, you may want to ask them if there are attorneys they recommend to help you set up an asset protection trust.
They may be able to give you some names to get started. , Asset protection trusts often have an attorney or a finance professional who serves as the trustee.
While in some cases you may be able to serve as trustee of your own trust, some state laws don't allow it.If you're establishing a domestic asset protection trust, the law in that state describes the person qualified to act as trustee.
Often this person must have specific financial licenses or expertise.
In many states, your trustee must be a resident of the state in which you establish the trust.
This is often true for offshore trusts as well.
Keep in mind that if you're able to serve as trustee of your own trust, it may no longer provide the same level of asset protection that it would if you had an independent trustee. , Asset protection trusts must include specific clauses and language to adequately protect the assets you hold in them.
Your attorney will draft the documents for you and go through them to ensure you understand everything.In its most basic form, asset protection trust documents are similar to the documents required to establish any other trust.
Your documents will contain language to establish the trust, identify the trustee, and list the assets included in the trust.
You also must name beneficiaries of the trust.
Typically people name their children or grandchildren as beneficiaries of their trust.
Keep in mind that if you protect your liquid assets using an asset protection trust, you will lose some access and control over the assets in the trust. , Once your trust documents are finalized, you must sign them to create the trust.
The execution formalities vary depending on where you've chosen to set up the trust.Typically, your signature must be notarized.
You also may need additional witnesses.
Depending on the location where you're establishing your trust, you may need to sign multiple copies of your trust documents.
In some states, you may have to travel to the state to actually execute your trust documents and establish your trust.
The same is true for some offshore trusts. , Once your trust is created, you must take all the liquid assets you want the trust to protect and transfer them into the name of the trust.
This may require opening bank accounts in the name of the trust.If your trustee is a financial institution, they may create deposit accounts for your trust within their institution.
Otherwise, you'll have to open an account in the name of the trust.
This typically means you also must request an employer identification number (EIN) from the IRS for your trust.
You can request an EIN free of charge online at the IRS's website by answering a few questions.
The EIN for your trust will be issued immediately.
In some states, the account in which you deposit the trust's liquid assets must be located within that state.
This also is true for many offshore trusts.
About the Author
Jonathan Green
A passionate writer with expertise in crafts topics. Loves sharing practical knowledge.
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