Asset Protection Trusts
Asset Protection Trusts in Utah
An asset-protection trust is a term that covers a wide range of trusts and legal structures. Most asset protection trusts are set up in an attempt to avoid or mitigate the effects of taxation, divorce, and bankruptcy for the trust’s beneficiaries. There are several reasons why someone should consider an asset protection trust but an asset protection trust is primarily used for higher net worth individuals or for people that have careers in high liability professions. An asset protection trusts primary function is to help protect you and your family from lawsuits. Stopping future claims from creditors in their tracks is our main objective. We combine asset protection strategies such as gifting assets to your family members or charities with an establishment of a trust to give you the most effective asset protection strategy.
An asset protection trust requires that the trust be created by someone other than the trust beneficiary. Assets are shielded from creditors when a trust is created by someone other than the trust beneficiary but this is not however a hard fast rule and there are some exceptions, exceptions include but are not limited to government entities and child support payments. A trustee must send notice of the proposed distribution to any child support creditor of the settlor at least 30 days before making a distribution to the settlor.
Utah established a self-settled domestic asset protection trust statute in 2013. The Utah asset protection trust provides protection as long as the irrevocable trust is funded and the person who created and funded the irrevocable trust meets the requirements of the statute. The Utah asset protection trust protects a person’s assets from attachment by creditors without losing the benefit of the assets. Creditors will not be able to require the trustees to pay distributions to the creditor and they will not be able to force distributions from the trust.
Asset Protection Trust Attorney in Salt Lake City
The important thing to remember is that every family’s situation is unique and not every family will need the level of planning that an asset protection provides. Often times the major assets you have in place provide sufficient asset protection but other assets could be at risk.
The previous asset protection trust statute was replaced mostly because of the corporate trustee requirement and that several types of creditors would still be able to access the trust assets. The bigger concern with the old statute was that the asset protection trust property could have been included in the estate of the settlor for estate tax purposes.
The current Utah asset protection trust has corrected the problems discussed above. There are no exceptions to the creditors and it does not require a corporate trustee. Future creditors of the settlor will also not be able to reach the trust’s assets, and the trustee will not be forced to make distributions from the trust to the creditors. Creditors of the settlor must wait until trust distributions are in the hands of the settlor to attach the assets as long as the requirements of the statute are fulfilled.
Asset Protection in Draper, South Jordan and Salt Lake City
For a trust to qualify for the asset protection statute, a trustee of the trust must be a Utah resident or have a trust company that is based in Utah. Settlors can still serve as a co-trustee, but the settlor cannot have the ability to participate in distribution decisions and every trust distribution from the trust has to be discretionary. Fraudulent property transfers to the trust are provided no protection by the statute. A creditor of the settlor who exists at the time the trust is created must bring an action to enforce their claim within the later of two years after the property is transferred to the trust or one year after the creditor could have reasonably discovered the transfer. However, settlors do have the opportunity to shorten the limitations period to 120 days by sending notice to known creditors and publishing a notice in a newspaper of general circulation in the county in which he or she lives.
ANSWERING Asset Protection QUESTIONS IN SALT LAKE CITY, DRAPER, AND SOUTH JORDAN
Because of all these potential pitfalls an estate plan should be custom-built for you and it is important to do things correctly the first time around. If you are in Salt Lake or Utah County we encourage you to contact Garner Law for an initial consultation where you’ll receive general divorce advice.