AIR-TIGHT TRUSTS AND ESTATE PLANNING

What Is An Estate?

An estate encompasses all of an individual's possessions, both tangible and intangible. This includes assets like their house, car, various financial accounts, and investments, such as stocks and life insurance, along with personal belongings and much more. Essentially, everyone has an estate, regardless of its size or complexity.


For a deeper dive into legacy planning, click here.


Estate planning goes beyond just preparing for the future. It offers a variety of financial options tailored to your specific circumstances, which can lead to significant savings and enhanced protection for your assets.

As stated previously, estates vary in size, depending on the person. What doesn’t vary, however, is the fact that at some point everyone dies (or becomes incapacitated). And it is here that estate planning comes in handy, allowing the person to determine how their assets will be preserved, managed, and distributed. This can include the people in that person’s life, organizations they hold dearly, etc. Moreover, estate planning allows for the determination of what each beneficiary will receive and when they are to receive it. Of course, estate planning will also include the best efforts to minimize the amount of money that will go to taxes, along with legal fees, court costs, and the like, ensuring that beneficiaries can keep as much as possible. 


The importance of estate planning should not be understated. Failure to plan appropriately could leave your assets in the hands of the state, which will use its own laws to determine who gets what, and what the value of each asset is for tax purposes. This process could take years, leaving your loved ones in a potentially detrimental position. There will also be no way to shelter your assets from various taxes and fees. In short, a failure to plan will put your beneficiaries in a disadvantageous position.

What is the importance of estate planning, and what might happen should someone neglect to make one?

What is the importance of estate planning

What differentiates a will and a trust, and which is preferable?

Before we delineate the differences, it makes sense to first go over the similarities between a will and a trust. Both, broadly speaking, are legal documents that allow you to decide what happens to your property and various assets after you die. 


A will is a legal document that directs who receives your assets and property after your death (and can also establish the legal guardian for your minor children), while a trust involves the appointment of one or more trustees who manage and distribute your assets to your beneficiaries. Furthermore, a trust goes into effect as soon as it’s signed, allowing for the distribution to occur while you are alive if you so wish. A trust will also avoid scrutiny during probate, which means that the distribution of your assets remains private to you and your family. The avoidance of probate also means that the distribution will happen much faster than with just a will, which will have to go through probate. These are the main differences, and it is important to keep in mind that in most cases having both a will and a trust will be beneficial. 

For asset and property distribution, whereas a will might be sufficient for those with a more modest estate (as it is easier to create and will involve lower costs while not requiring the appointment of a trustee), to maximize control over your assets and put your beneficiaries in the best possible position you should also create a trust. More on will information here.

What are the Different Types of Trust?

A revocable living trust cannot protect you from creditors or provide any tax advantages, but it guarantees a simple transfer of property after your death and can be altered at any moment. An irrevocable living trust is another option that provides tax benefits and protection from creditors. It can also help provide for family members for many generations, provide an income, and contribute to charities, depending on whether it’s an asset protection trust, a dynasty trust, a charitable remainder trust, or an irrevocable life insurance trust. Creating a foundation can also provide you with some of the same advantages while adding more control for a longer-lasting legacy. 

Revocable Living Trusts

A trust is a fiduciary arrangement wherein you entrust the management of your assets to a third party for the benefit of one or more beneficiaries. The simplest and most commonly used trust is a revocable living trust.


When you die, your assets (the trust assets) are divided according to the terms of your revocable living trust.

Irrevocable Living Trusts

Creating a trust is one of the simplest and most effective ways to ensure that you retain control over the distribution of your assets after you pass away.


Put simply, a trust is a system to keep track of who owns and maintains your property, as well as how it is managed and distributed. A trust is similar to a vault that you generate your own combination for and place property inside of, giving you the most control and peace of mind.

Asset Protection Trusts

One of the most powerful and effective trusts is the asset protection trust. The asset protection trust, unique to all others, is created to benefit the trust’s creator (known as a self-settled trust). Basically, an asset protection trust allows someone to cede legal ownership of assets while continuing to gain benefits from them, thereby protecting them from creditors who are only able to reach their assets.

Charitable Remainder Trusts

A charitable remainder trust is a type of irrevocable trust. It’s an instrument you may finance, such as other irrevocable trusts, and once you put assets in, you can no longer pull them out or change the trust’s conditions. A charitable remainder trust, unlike most other irrevocable trusts, is set up to benefit both you and the charity of your choice.

Dynasty Trusts

A dynasty trust is an unbreakable trust that permits wealth to be preserved inside a single family for numerous generations without having to pay taxes. The tenure of a dynasty trust and its tax benefits are the two main advantages of a dynasty trust. 

Irrevocable Life Insurance Trusts

When it comes to explaining an irrevocable life insurance trust, the simplest way to explain it is a trust that is created to keep the grantor’s life insurance policy(ies). Irrevocable trusts containing life insurance policies are known as Irrevocable Life Insurance Trusts, or ILITs, because life insurance is one of the most prevalent assets in irrevocable trusts.

Land Trusts

A land trust is a revocable living trust valued for its anonymity, not tax or asset protection. It makes it harder for legal adversaries to find and sue you. Property held in a land trust is owned through the trust, often with an LLC as the beneficiary and a chosen trustee. This setup helps keep your identity private and is ideal for safeguarding personal residences.

Special Needs Trust

A Special Needs Trust (SNT) protects eligibility for government benefits like Medicaid and SSI by keeping assets outside the beneficiary's personal ownership. It covers additional needs like medical expenses not covered by insurance.


Trustees manage the trust, ensuring assets are used to benefit the beneficiary without affecting government aid eligibility. Legal guidance is essential for proper setup and management.

Businesses with income that is generated from outside the United States can benefit from these vehicles as well. Using your wealth to leave a philanthropic legacy could be as simple as establishing a foundation, allowing you to make a difference in the world, be recognized for it, and save money on taxes along the way. The Internal Revenue Service recognizes a foundation as a type of tax-exempt charitable organization (while others are known as a public charity).

Create a Foundation

Create a Foundation

Building assets involves hard work and dedication, and you rightly expect that the wealth you've accumulated through your business endeavors and personal efforts should be safe from future risks such as liabilities, lawsuits, and creditors.


Unfortunately, this is often not the case.


Data shows that approximately 20 million lawsuits are filed annually, with one in four related to debt collection. Creditors are often relentless in their pursuit of recovering lost assets, which can place your wealth at significant risk. Asset protection serves as your security blanket, ensuring that your hard-earned assets are shielded from potential claims.


Lawsuits and asset recovery processes can be exceedingly costly, with billions of dollars reclaimed through settlements every year. In many instances, defendants lose substantial portions of their assets to satisfy legal claims. However, you don't have to let your wealth be vulnerable to such outcomes.

Estate planning and robust asset protection strategies are crucial for safeguarding your financial legacy from creditors and legal disputes. By implementing comprehensive asset protection measures, you can secure your wealth against potential threats, ensuring that the fruits of your labor remain intact and available for your future and that of your beneficiaries.

Protecting Your Hard-Earned Assets

What Is Asset Protection?

Asset protection is the adoption of various strategies to protect one’s wealth. It is an essential component of financial planning and ensures you have a safety net against claims from creditors.


Individuals and businesses use asset protection to limit the access creditors have to various crucial assets while staying within the bounds of the debtor-creditor law. Therefore, your most valuable assets remain untouched in case of seizure, taxation, or other losses.


Asset protection strategies are legal and the best alternatives over fraudulent practices such as contempt, concealment, tax evasion, fraudulent transfer, and bankruptcy fraud that an individual or business may use when desperately trying to evade creditors.


What is an Asset Protection Plan?

An asset protection plan is a suite of legal strategies enforced before a claim or lawsuit arises to deter the claimant from seizing your assets. It ensures that an individual or business owner will not lose their most-valued property in such a scenario.


Enforcing an asset protection plan early is the best bet since most plans get stronger the longer they’re in force.

Do You Need Asset Protection?

If you lose a lawsuit, especially one filed by a creditor, you will most likely lose your assets, such as your car, home (depending on homestead protections in your state), your business, your investments, real tangible property, and the money in your savings or checking account. A lawsuit can also drain you of money in legal fees, cause stress, take up your time and energy, and damage your reputation.



Asset protection planning lets you prepare in advance for these scenarios since you can never be sure when a lawsuit may arise. 

Factors That Determine Asset Protection Strategy

Several factors determine the degree of asset protection needed for a business or individual. Asset protection planning analyzes these factors to develop the best asset protection strategy.

The primary factors that determine the degree of asset protection required include:


  • What kind of industry you are in and what you do for a living
  • Who is a part of the business
  • What kind of earnings or revenue are you expecting
  • What your role is in the business
  • Do you have any licenses or Intellectual Property to protect?
  • What type of assets do you want to protect
  • Nature of the asset


*Regarding nature of the asset, several types of assets are exempted from creditor claims. For instance, a homestead exemption protects homeowners from being forced to sell their homes to repay debt. 

What are the Various Asset Protection Strategies?

Over 40 Million lawsuits are filed every year in the USA with an additional 1 million attorneys joining the workforce every year!


– U.S Financial Education Foundation



In essence, this means that you must always remain vigilant, and take the necessary steps to protect yourself from potential litigation. 

There are three key asset protection strategies. They include:

01 01
Asset Protection Trusts (APTs)

This is one of the strongest methods of asset protection. An asset protection trust works like a bank trust that holds assets at the discretion of the settlor. These assets are not legally entitled to the owner. Instead, the owners are beneficiaries of equitable interest in the assets. 


Asset protection trusts offer asset protection without breaching tax evasion laws.

02 02
Transferring Property Rights

An individual may transfer the legal right of their asset to a trusted friend, spouse, or relative to protect it from creditors. Therefore, the debtor can still possess their asset without the risk of losing it to creditors.



However, there’s a risk of conflict if they sever ties with the person they transferred the asset’s ownership to.

Legally Protect Your Assets

Turn to the Right Professionals to Legally Protect Your Assets

Asset protection is the best way to legally keep your hard-earned wealth safe from creditors if they threaten to file a lawsuit or seize it. Contact a trusted professional today and learn how to secure your wealth from future risks.

Asset Protection and Real Estate

  1. Real estate asset protection uses the same principles as other assets. Typically, you’d employ the following three strategies to protect your real estate from creditors:
  2. Having the property under tenancy by the entirety – meaning you jointly own the property as a couple, thus one’s debt cannot give the creditor authority to seize the property unless you’re both in debt to the same creditor.
  3. Creating an LLC
  4. Having the property in someone else’s name

In order to avail yourself of the generous provisions of the Internal Revenue Code, an Investment Trust must be custom designed for your objectives. By filling out the questionnaire below we will be better able to ensure your objectives are met.

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