TRUSTS

A Trust creates a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. Since trusts usually avoid probate, your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will. Additionally, if it is an irrevocable trust, it may not be considered part of the taxable estate, so fewer taxes may be due upon your death.

UNDERSTANDING TRUSTS

Trusts are legal arrangements that allow individuals to transfer their assets to a separate entity, managed by a trustee, for the benefit of designated beneficiaries. Trusts can be used for various purposes, including asset protection.

1. Revocable Living Trust: This trust allows individuals to maintain control over their assets during their lifetime while providing a smooth transfer of assets upon their death. However, it does not offer significant asset protection as the assets are still considered part of the individual's estate and can be subject to creditors' claims.

2. Irrevocable Trust: Unlike a revocable trust, an irrevocable trust cannot be easily changed or revoked. By transferring assets into an irrevocable trust, individuals can protect those assets from creditors, lawsuits, and potential estate taxes. However, once assets are transferred, the individual no longer has control over them.

3. Domestic Asset Protection Trust (DAPT): DAPTs are irrevocable trusts established in certain states that offer enhanced asset protection. These trusts allow individuals to be both the grantor and beneficiary while protecting the assets from future creditors. However, DAPTs have specific requirements and limitations, and they may not be recognized or enforceable in all states.

4. Offshore Trust: Offshore trusts are established in foreign jurisdictions with favorable asset protection laws. These trusts can provide an additional layer of protection by placing assets outside the reach of domestic creditors. However, offshore trusts can be complex to set up and maintain, and they may be subject to international tax reporting requirements. It's important to note that asset protection trusts should be established with the guidance of experienced legal and financial professionals to ensure compliance with applicable laws and regulations.

Trusts are defined by state law, and can come in a number of forms. Trusts include a number of elements that define the assets held within, designate your beneficiaries, and designate a trustee to manage the trust assets.

Assets in a trust, other than a testamentary trust, most often will avoid the probate process and the associated statutory fees. With the guidance of our attorneys at our partner law firm of Tresp, Day & Associates, Inc, you can ensure that your assets are protected. A trust can also prove critical to avoid conservatorship proceedings if you ever become physically or mentally incompetent before your death. Trusts can take many forms, including:

  • Revocable Living Trust

  • Irrevocable Trust

  • Generation-Skipping Trust

  • Special Needs Trust

  • Private Foundations

  • Qualified Personal Residence Trust (QPRT)

  • Qualified Terminable Interest Property Trust (QTIP)

  • Irrevocable Life Insurance Trust (ILIT)

  • Grantor Retained Interest Trust (GRIT)

  • Grantor Retained Annuity Trust (GRAT)

  • Grantor Retained Unitrust (GRUT)

  • Charitable Trusts

BENEFITS

The best asset protection available in the United States of America is achieved through Trusts.

PRIVACY

Trusts are not filed with the state but it is an internal agreement done by an attorney, so there is no public record, except with the IRS, a tax id number will be required. Also, the members and managers of the LLCs associated with the Trust do not have to be listed on the public record with the State of Wyoming.

IRON-CLAD ASSET PROTECTION

Trusts are separate entity from their creators, managed by a Trustee, not the creator. As such the assets inside of the trust cannot be taken out of it to satisfy an obligation of the creator of the trust.

A PRIVATE TRUST COMPANY MAY SERVE AS TRUSTEE

The Trustee must be either a person that lives in Wyoming or a Private Trust Company (which can be a Wyoming LLC), approved by the Wyoming banking commission. This LLC must also have an office presence inside the state of Wyoming. This Private Trust LLC’s sole purpose is being the Trustee to this one trust. The Trust can pay this LLC for Trustee services.

CONTROL

One of the major benefits of forming a trust is how much control you have over its actions. The Trustee can be advised by an Investment Advisor (which can be an LLC). The creator can be the manager of this LLC and also a member of it. The Trust can pay this LLC for investment advice. This gives the creator total say in what the trust is allowed to do, as by law the Trustee must do what the Advisor says.

FLEXIBILITY AND CONTROL

The Trust beneficiary can be an LLC. This LLC can be managed by the creator, but the creator cannot be a member of it. The members can be changed, giving the creator flexibility over who gets the assets of the trust, if say there was something that changed with one of the original members of the Beneficiary LLC.