Protecting your family’s wealth with an asset protection trust

Building wealth takes a certain mindset. Financial discipline and strategic decisions, with a focus on long-term growth, have created a legacy that you can pass on to future generations.

However, certain situations can result in a significant depletion of your assets, which is why you should consider an asset protection trust.

What is an asset protection trust?

You want to safeguard your family’s wealth so that future generations can benefit from your hard work. An asset protection trust (APT) enables you to transfer your assets to the trust, thereby creating a layer of separation that makes it more difficult for others to claim those assets.

There are two main types of APTs:

1. Domestic Asset Protection Trusts (DAPT\s): These trusts are established in the United States and are only allowed in certain states, including Florida.
2. Offshore Asset Protection Trusts (OAPTs): These are established in foreign countries that have favorable asset protection laws, such as the Cook Islands and the Cayman Islands.

Establishing an APT has several benefits, such as:

1. Assets held in an APT are typically protected from lawsuits
2. The APT safeguards your assets from creditors
3. You can ensure that your assets are passed on to your beneficiaries according to your wishes.

There are two significant caveats:

1. Asset protection trusts are typically irrevocable, meaning that once the trust is established and the assets are transferred, the settlor (the person who created the trust) can not make changes to the terms or terminate the trust.
2. The settlor can not also be the beneficiary of the trust.

Creating an effective APT takes careful planning. It should be established well in advance of facing potential financial risks; otherwise, it could be deemed fraudulent. You will also need the expertise of a legal professional to ensure your asset protection trust complies with Florida’s laws and meets your goals.