How a Trust may be utilized in Asset Protection

A Trust is formed by a legal document (Deed) setting out how assets transferred to it by a settlor are to be managed and distributed by a trustee on behalf of named or un-named benificiaries. Business has been conducted through a trust since they were first established during the Babylonian era. In the U.S the most common trusts are Asset Protection Trust, Living Trust, Revocable Living Trust and Irrevocable Living Trust.

It is completely legal for assets to be transferred into a trust, however fraudulent transfers must be avoided. A transfer of assets to a trust is considered fraudulent when the transfer is undertaken with the intent to delay, hinder or defraud a creditor of the transferor. Assets transferred to a trust must be undertaken well in advance of any possible litigation by creditors or court judgments.

Trusts may be used for Asset protection, Estate planning, Tax Planning and for keeping the ownership of Assets private. A trust is a useful asset protection vehicle for professionals and business people such as attorneys, architects, surveyors, doctors, builders, the self employed and Company Directors.

Parties to the Trust

• The Settlor who settles the trust with the settlement amount, which may be cash, property, shares or other assets. Can be as little as $10
• The Protector appoints the trustee and has a very important position within the trust. If you are the Director of a corporation that acts as trustee of the trust, it may be wise for you to assume the role of protector yourself.
• The Trustee who is the legal owner but not the beneficial owner of the trust assets, is responsible for the management of the trust assets
• The Beneficiaries receive the benefit of the trust income and assets upon distribution by the trustee according to the trust deed.