Florida's asset protection trusts: Protecting your assets from creditors

What is an Asset Protection Trust?

An asset protection trust is essentially a legal entity designed to protect the settlor's assets and beneficiaries from creditors and lawsuits. The trust prevents your property from being taken by others if you get sued. It also helps reduce your future tax liability while providing you with a way to save for retirement and pass on some of your wealth to the next generation.

More specifically, this is a type of irrevocable trust that has been established to protect the trustor's assets from creditors, lawsuits, and the trustor themselves.

The trustor of an asset protection trust can appoint one or more trustees who are then responsible for overseeing all aspects of the A-P Trust's administration on behalf of and for the benefit of the beneficiaries named in the document. Such a document can be handy in states like Florida, where many laws favor creditors over debtors, making it easy for creditors to go after debtors' hard-earned property or savings accounts.

This type of trust can be created in any state, but it must follow certain rules set out by the state. For example, Florida requires that all trusts be created using a written agreement called a Declaration of Trust. This document sets out how property is distributed and what happens when the settlor dies.

Why Do You Need an Asset Protection Trust

An essential aspect of life is that it is unpredictable. We never know what could happen in the future. The only thing we can do is to try to prepare for the worst. You can do this by establishing asset protection trusts. They are beneficial in endless ways, including:

Asset Protection

Asset Protection Trusts offer Florida residents the ability to protect their assets from future lawsuits, avoid probate administration on their death, and have a tax-free income stream. Experienced attorneys design these trusts to protect the assets of the trust maker and their beneficiaries.

This trust offers versatile protection, one which can be tailored to each client's specific needs. It may not only help provide better asset protection, but people looking to provide themselves some insulation against future legal entanglements or other claims arising from a car accident or perhaps a personal or professional wrongdoing.

The protection that comes with an irrevocable trust also means 3rd parties can't challenge any transactions involving the trust itself. This can be useful where there might be existing litigants involved who are financially unable to pay their debts or people who want to hold up your financial affairs. At the same time, they try to get the money they rightfully deserve out of other resources that you control, such as retirement accounts.

Medicaid Eligibility

State-funded areas of health and care like Medicaid have the potential to take away from the initial asset base upon which your wealth has been built. The asset protection trust can be designed to maintain a separate legal entity, allowing them to own property and assets independently. This can help the applicant qualify for government funding so as not to have all their hard work stripped away or put in jeopardy if they fall ill or cannot support themselves financially.

This trust may help protect their assets from being confiscated. Asset protection trusts also maintain privacy so that private information can be kept out of public view and away from potential identity thieves specializing in fraud against poor people who qualify for benefits under Medicaid.

Tax Benefits

The asset protection trust also offers enormous tax benefits because the IRS does not tax asset protection trusts as they would your typical irrevocable trust. Why? Because the IRS does not view asset protection trusts as taxable entities, so you won't need to apply for an EIN for this trust to be considered a separate entity for tax purposes!

The Florida Asset Protection Trust is regarded as a disregarded entity and uses the settlor's social security number for tax purposes. This asset protection trust can provide you with significant savings when it comes to taxes!

In a nutshell

An asset protection trust is not a new type of trust but a variation on old trusts that were used to protect the assets of the wealthy. Today, anyone can use an asset protection trust to protect their assets. Florida residents can use Florida asset protection trusts to protect assets from creditors or the taxman.

It may seem like establishing an asset protection trust would be expensive, but that's not always true. We make it easy. We structure these trusts to ensure that your assets stay safe while you benefit from freedom and flexibility.