The True Definition of Asset Protection Trust: Benefits Encompassed!
The world is “sue-happy” these days. Securing your money in an asset-protection trusts in California just makes good sense. When the time comes to think about end-of-life scenarios, one of the best ways to secure your family’s future is to set up a lifetime trust for people who will be the beneficiaries.
After your demise, it’s designed to be owned by a third party, who will have jurisdiction over the money and also technically own it.
You also have the choice to grant one or more of the beneficiaries the ability to select the people who will receive the assets of the trust after their eventual deaths. No one who is to receive money will be able to “blow it all” in one shot because the trustee will stop that from happening.
Sometimes, people will want to set up a trust for themselves so that they have access to income that is out of their control. It might be because people know their spending habits, have ex-spouses from whom they want to protect their money or any other legal reason. That is, what we call, self-settled asset protection.
How A Lifetime Trust Works
The trust may also be either irrevocable or revocable. If it’s the former, then anyone wishing to change the applicable rules must first obtain a court order. If this is the case, then the beneficiaries have certain rights.
In California, for example, not only will a court order be necessary, but everyone involved who is still living must also agree to change the trust. In rare cases, particularly when the best interests of someone involved are concerned, a judge is allowed to overrule the consensus and revisit all applicable legal declarations.
Otherwise, it’s “written in blood,” as it were. A revocable trust, as the name implies, can be changed as long as the grantor is not incapacitated. The State of California has other guidelines governing the situation. For example, setting up a revocable trust only requires the grantor’s signature.
Generally, this is done before a notary to prevent any malfeasance. Grantors can even set up such trusts online without the help of an attorney, although this is not recommended because of the danger of unforeseen and/or accidental loopholes, which will result in longer probate actions outside of California.
Benefits Of A Lifetime Trust
There are some of the obvious benefits of lifetime trust. Let’s try to find it out to understand the entire concept in detail.
You Don’t Have To Worry; Its In Safe Hands
The chief advantage of such a trust is that it is in the capable hands of a trustee, which is important. One or more of the beneficiaries might become incapacitated and be no longer able to make decisions. Also, even folks of sound mind and/or body might die unexpectedly. Such a trustee will be a force of order in the possible chaos.
Inheritance Is Not A Marital Asset
Another positive point in favor of setting up a trust for asset protection is that, depending on where you live, inheritance is no more a marital asset, and so is safe from divorce settlements or awards that result from a lawsuit.
Trustee Has The Final Decision
Also, in the case of bankruptcy or other financial problems, creditors cannot access the money. Sometimes, one of the beneficiaries becomes wealthy for some reason. In that case, if the trust is discretionary, then the trustee has the final decision on whether that person will continue to receive payouts.
Added Flexibility
This flexibility is a great advantage, too, when one of the beneficiaries is a spendthrift or has enormous debt. The trustee can then protect the money in the trust from that person’s financial obligations.
California also has high probate costs if someone just has a will. The first $100,000, for example, has a probate fee of 4%, which one has to pay twice. The first time, it goes to the attorney.
After that, the executor receives it. This is all before the beneficiaries receive their inheritance. For a variety of reasons, California courts are listing probate times in a number of years rather than months. By having a family asset protection trust, you can skip the process completely.
Complete Command And Discretion On The Amount
The beneficiary does not receive the lumpsum amount at a time for different expenses like education, health, and support. However, the trustee of the trust has complete control and discretion over the amount of property or money.
Another important benefit of the asset protection trust is that the beneficiary can only spend some of the money or their inheritance at a time. It means the trustee has all the control. It is how the assets are safe from any spend-thrift mindset of one of the beneficiaries.
If the beneficiary of the trust gets divorced, the creditor or, say, the ex-spouse will not get a share of the money. Hence the property remains safe and does not go away from the hands of the family.
Trusted Advice For Planning Your Estate In California
When setting up your trust, there are some dos and don’ts. They are:
- Catalog your assets, which should include things like your house, money in the bank, brokerage accounts, and valuable jewelry, art, or other collectibles, such as baseball cards or numismatic collections.
- Don’t list vehicles, such as boats, cars, or planes, because they depreciate in value over time.
- One should not include Retirement accounts either. They don’t go through probate anyway, so it’s not necessary.
- Pick your beneficiaries, which can be either people or organizations.
- Get an attorney to draw up all the necessary paperwork for the trust. There is no standard form in California, so your lawyer just has to include all the required language to fulfill your wishes.
- Be sure a notary verifies everything. If your lawyer is able to notarize documents and does not possess the trust’s name, then that person can perform those duties too.
Conclusion
There are many benefits of the asset protection trust. All that you need is to ensure that you take the assistance of a learned law firm. They are experts and can help you in every possible way.
Citadel Law can adapt to your unique circumstances and protect your assets from potential losses. Call (800) 662-0882 today to learn more about the benefits of lifetime trusts.
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