Are you considering an asset protection trust? This is a common trust used to protect a person’s assets when they may owe debts. Likewise, it’s a great way to put your assets into a trust for your beneficiaries. There are a lot of benefits to an asset protection trust. Here’s what you need to know about asset protection trusts.
Asset Protection Trust
Since asset protection trusts are becoming more common, you may be wondering what it is. An asset protection trust protects your assets against lawsuits, judgments and creditors. Not only does this help you if you have any pending lawsuits, but it can also help you in the longrun, when it comes to splitting your assets among beneficiaries. If you have your assets in a trust, you may be wondering how it can benefit you more than simply protecting against creditors. The truth is that asset protection can offer you tax benefits.
Tax Benefits of a Trust
You may receive tax benefits for establishing a trust. When assets end up distributed under a trust, the beneficiaries pay no tax on the appreciation value. If you have a house, for instance, and you put it into an asset protection trust, then you will have fewer taxes. Your beneficiaries avoid capital gains tax on the value gained on the home. Capital gains taxes can be extremely high, especially if you bought the house decades ago. For you to have your assets in a protection trust saves your beneficiaries from those taxes.
Help With Asset Protection Trusts
Different states have different laws regarding asset protection trusts. In fact, some states will not recognize or allow the creation of asset protection trusts. You have to know your state rules on the matter. If you don’t, a quick search will tell you if your state allows it. Even if you live in a state that provides you with the ability to create a DAPT, it doesn’t necessarily mean that it’s an easy process. Lawyers who work in estate planning know the ins and outs of asset protection.
If you’re considering an asset protection trust, there are many benefits, including tax benefits. Don’t let the complexity stop you. If you have help from an experienced lawyer, he or she can walk you through the process and help you to understand the complexities of estate law. If you’re ready to make the jump and create an asset protection trust, call an estate planning lawyer for a consultation.