As some Oklahoma residents have already learned, protecting assets may be difficult. For many individuals, there are reasons to use tools for asset protection, especially those that offer enhanced security for the future of an individual's family. Asset protection trusts are an example of such a tool.
Some states have enacted legislation that allows asset protection trusts. Such trusts enable individuals to protect their assets from lawsuits and other liabilities. For instance, professionals, such as physicians, may use asset protection trusts to ward off potential losses in malpractice suits.
Some states provide their businesses with a comfortable environment for self-settled asset protection trusts. This is a viable way to encourage use of the trusts. Oklahoma, for instance, offers protection for up to $1 million.
Exceptions to trusts for individuals may apply. Some states offer exceptions for spouses or a statute of limitations for creditors. The exceptions may be limited by time, so that a trust that is created today will not be vulnerable in future years. Some states allow exceptions for child support and alimony.
Understanding that an asset protection trust does not hide assets or delay taxes is important. Yet, using estate planning tools in combination with a protection trust may provide a way to decrease estate taxes for individuals' beneficiaries.
Employed properly, diligently and only after having consulted with an estate planning professional, such as an attorney, trusts can be an invaluable tool. An estate planning attorney may provide insight into whether an asset protection trust will suit an individual's particular needs and, if so, help structure the trust accordingly.
Source: Money News, "More States Embrace Asset-Protection Trusts", Denis Kleinfeld, December 21, 2014