Monday 11 August 2014

How Should Asset Protection Trusts Be Conducted

By Tanisha Berg


Creating wealth and acquiring assets requires hard work and takes time. However, at times, you may be faced with lawsuits that risk your personal wealth. It is essential you consider seeking asset protection trusts to safeguard your wealth. Some professions and individuals may be more likely to encounter increased risk of being faced with lawsuits than others. If you are an entrepreneur or a corporate board member, you could find yourself in lawsuits that demand you surrender your assets.

You can imagine how frustrating and depressing it could be when you lose all that you have acquired in one lawsuit. This is why you should take a proactive move to ensure your assets are protected from creditors. It is important you work with a qualified legal counsel to assist you in the process of entering into asset trusts. This is because a lot of paper work is needed and all documents should be processed properly.

Any omission or mistakes could further risk your property. Different people may have different customized solutions in managing their assets. It is important that you determine which assets need to be protected. With the economy still lingering in a tailspin, uncertainties can arise which put you into difficult situations.

If you do not have any lawsuits filed against you, then it is the right time to start preparing to protect assets. Similarly, you might have purchased your home through a mortgage plan and although you are repaying the loan comfortably, you may not know what could happen in future. A trust acts as a legal entity, which you create through the help of an attorney.

Sometimes, when you try to enter into trusts arrangements when there is a pending case in court, it may be seen as depriving the creditor the ability to access your assets. This could easily be noticed by the court and possible reversal of the asset protection procedure may be ordered. In planning for your assets protection, you ought to understand that some of the clauses such as the spendthrift are irrevocable.

You need to ensure you consult a qualified lawyer to spearhead the process so that you do not make mistakes. When you enter into asset protection trust arrangements, you simply take the assets that are likely to be claimed by creditors through lawsuits, also known as nonexempt assets and then reposition them to properties, which are out of reach of the creditors. And, these are known as exempt properties or assets.

The original owner of a property acts as the grantor and the trust should allow him or her to direct an investment featured in the trust to receive principal or income as well as veto distributions to other parties that are disclosed in the arrangement. Besides, the grantor may also retain some power to allow them distribute their assets through what is referred to as limited power of appointment during the time of death.

If you try to transfer your property when there is a claim under investigation, it may be viewed as trying to intentionally delay, hinder, or defraud the creditor. It is easy for the court to notice such flaws and consider reversing them, meaning you may have your properties handed over to the creditors to pay off the debts. However, when you start the process way before such lawsuits arise, you are placed in a better position to safeguard your wealth.




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