If you’re considering asset protection, you might have come across the idea of using a trust to safeguard your wealth.
The process of asset protection planning is a legal strategy used to minimize the exposure of your assets to creditors or predators who may file lawsuits. When used appropriately and drafted by a Pasadena estate planning lawyer, trust can be valuable tools for keeping your assets safe from creditors. You can secure your wealth for future generations while minimizing the risk of losing your assets to unpaid debts or lawsuits.
There are two primary types of trusts for asset protection, irrevocable trusts and spendthrift trusts. An irrevocable trust officially transfers ownership of the assets inside the trust outside of the person who set up the trust and into the trust entirely. Creditors cannot easily access these assets once they are inside an irrevocable trust.
As your second option, spendthrift trusts help protect the money from being spent recklessly by the chosen beneficiary or being taken by creditors. Spendthrift trusts limit beneficiary options over the trust assets, meaning that it is much harder for them to assign or transfer the interest. The structure of this keeps creditors from accessing these assets since the beneficiary is not able to sell the interest or use them as collateral.
Irrevocable trusts provide a great deal of protection because the assets no longer belong to the individual who created the trust, which means that a creditor cannot lay claim to anything held inside it. Existing California laws support irrevocable trusts, allowing you to use these as a legal strategy to protect your assets from creditors or predators in the future. Talk to our Pasadena estate planning lawyers about how more strategies can help.
