Which asset protection trust is the best? Is it possible that the best trust for protecting your assets from creditors, lawsuits, and other risks, is not an “asset protection trust?” In this guide, we’ll cover the key factors to consider when selecting a trust for protecting your net worth. But first, let’s talk about what an asset protection trust is.
What Is an Asset Protection Trust?
An asset protection trust (or APT) is an irrevocable trust that has three main features. It is “self-settled,” you name yourself as the beneficiary, and it has “spendthrift” provisions.
An Asset Protection Trust is Self-Settled.
The first feature of an APT is that it is self-settled. That means that you create it (or “settle” it). In contrast, someone sets up the standard irrevocable trust for someone else’s benefit.
You Name Yourself As The Beneficiary.
One of the reasons that APTs are so popular is that you list yourself as the beneficiary of the trust. In this way, it’s just like your standard living trust that is for your benefit during your lifetime. Except that most living trusts are revocable, and an APT is irrevocable.
It Has a Spendthrift Provision.
A spendthrift clause is language in the trust that says someone else like your creditor can’t get the assets you transferred to the trust. Below is a small portion of the spendthrift language generated by WealthCounsel. (WealthCounsel is one of the US’s major suppliers of legal documents to asset protection attorneys).