A trust is a legal mechanism in which a person can secure property or money on behalf of a third party. Many people set up asset protection trusts to prevent family wealth or property from being lost in the event of bad economic situations. It is relatively easy to set up these vehicles with the help of a wealth advisor or estates attorney.
These legal structures are normally governed by the laws of the jurisdiction in which they are set up. However, the settlor may appoint another governing jurisdiction if he or she chooses. It is important to remember that states will usually not recognize the laws of another state that conflicts with its own public policies. In addition, if the estate includes real property, then this will be governed by the laws of the state in which the property is situated.
The purpose of these vehicles is to split the enjoyment of the trust assets from its legal ownership, which originates from the settlor. The beneficiaries continue to have an equitable interest in the estate; however, they cannot hold the legal title until they come of age. The legal effect of this is to insulate the money or property from any claims that may be brought by creditors without concealing its intent or trying to evade taxes.
It is important to remember, however, that there are some exceptions to this rule. If the beneficiary has support obligations to a former spouse or a child who is still a minor, then the courts may order a trustee to satisfy those obligations from the funds held in the trust.
Sometimes these structures may be set up offshore, for example, in one of the Caribbean nations who offer certain tax benefits. These offshore trusts do not normally prevent legal action from occurring against an individual in their home country. Any court orders that are made under divorce or creditor advantage laws can still be made against an individual to re-coup funds owed. A judge may order a settlor to repatriate funds from an offshore jurisdiction if he or she determines that the settlor has control of the assets.
In such cases, the settlor is wise to seek legal counsel from a competent estates attorney, who can advise them of their options. However, it should be noted that failure to comply with such court orders may be viewed as contempt of court, which can lead to imprisonment for other penal fines. This is why it is important to have a clear separation between the settlor and those who have control over the assets, in a properly established trust.
Sometimes these structures are set up offshore, which means that they are not administered in the United States. An offshore trust structure is not completely private, however. There are still many reporting requirements and disclosure requirements that are enforced by the Internal Revenue.
For anyone who wants to set up asset protection trusts, they should first seek the advice of an estates attorney who has a lot of experience in the industry. It is important to make sure that all legal deeds are executed properly and that all assets to be covered are clearly indentified.
These legal structures are normally governed by the laws of the jurisdiction in which they are set up. However, the settlor may appoint another governing jurisdiction if he or she chooses. It is important to remember that states will usually not recognize the laws of another state that conflicts with its own public policies. In addition, if the estate includes real property, then this will be governed by the laws of the state in which the property is situated.
The purpose of these vehicles is to split the enjoyment of the trust assets from its legal ownership, which originates from the settlor. The beneficiaries continue to have an equitable interest in the estate; however, they cannot hold the legal title until they come of age. The legal effect of this is to insulate the money or property from any claims that may be brought by creditors without concealing its intent or trying to evade taxes.
It is important to remember, however, that there are some exceptions to this rule. If the beneficiary has support obligations to a former spouse or a child who is still a minor, then the courts may order a trustee to satisfy those obligations from the funds held in the trust.
Sometimes these structures may be set up offshore, for example, in one of the Caribbean nations who offer certain tax benefits. These offshore trusts do not normally prevent legal action from occurring against an individual in their home country. Any court orders that are made under divorce or creditor advantage laws can still be made against an individual to re-coup funds owed. A judge may order a settlor to repatriate funds from an offshore jurisdiction if he or she determines that the settlor has control of the assets.
In such cases, the settlor is wise to seek legal counsel from a competent estates attorney, who can advise them of their options. However, it should be noted that failure to comply with such court orders may be viewed as contempt of court, which can lead to imprisonment for other penal fines. This is why it is important to have a clear separation between the settlor and those who have control over the assets, in a properly established trust.
Sometimes these structures are set up offshore, which means that they are not administered in the United States. An offshore trust structure is not completely private, however. There are still many reporting requirements and disclosure requirements that are enforced by the Internal Revenue.
For anyone who wants to set up asset protection trusts, they should first seek the advice of an estates attorney who has a lot of experience in the industry. It is important to make sure that all legal deeds are executed properly and that all assets to be covered are clearly indentified.
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