Revocable Or Irrevocable Trusts
If you want to get the best protection, you need to transfer your assets to irrevocable asset protection trusts. They are considered most secure legal method that you can use to protect your assets. You must give up your ownership title to a trustee, but existing laws can assure you that your assets are safe. The highest level of security can be provided by irrevocable offshore asset protection trusts.
You have the alternative of using revocable trusts, but they are considered just an extension of your will. Usually, the grantor, trustee and beneficiary are the same person and the grantor doesn't give up on his assets. In the case of irrevocable asset protection trusts, the grantor gives up his assets to a trustee that has the legal job of managing the assets as states in the trust. Also, the grantor can benefit from the trust. Another advantage of irrevocable trusts is that transferred assets are not subject to the estate tax. On the other hand, the revocable trust doesn't offer this benefit.
Assets transferred to irrevocable asset protection trusts can be structured without capital gains taxes and if they are combined with international structures they can reduce income taxes. Revocable trusts are designed to eliminate probate. They don't eliminate taxes and don't offer asset protection. Because the grantor has power of the assets transferred to the trust, he has no defense in case of lawsuits. The control is the same with ownership and the grantor can lose any part of his assets if he gets sued.
After a grantor creates an irrevocable trust, it cannot be changed or dissolved by him because he doesn't own the assets anymore. This is a valuable estate-planning strategy and with an independent trustee, asset protection trusts are much safer. With the help of irrevocable asset protection trusts the transferred assets are out of your taxable estate. This is legal and it can save you a lot of money by reducing your taxes. Also, the assets are protected from creditors and claimants.
With irrevocable asset protection trusts it is mandatory to have an independent trustee that takes the ownership over your assets. This can seam dangerous, but in fact it is perfectly safe. Laws impose obligations are rules to the trustees and they are not able to benefit directly or indirectly from the trust.
A trustee must manage the assets without gaining anything or having private advantages and he is liable for the profits made from the asset protection trusts. The trustees also must do everything in their power to assure that the interests of the beneficiary are respected. If you don't feel comfortable with the trustee, asset protection trusts have another safety net: the trust protector. He can hire and fire trustees and he also limits the amounts spend by the trustee.
Most asset protection trusts can offer total asset protection, but they need to be planed in time and correctly. There are different layers of protection and tools that can be used in order to assure you that your assets are safe. You just need to have patience and start right away to plan a strategy that can efficiently protect your assets.
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