What are Asset Protection Trusts?
If you want to protect your assets from creditors or to alleviate the effects of taxes or divorce, a domestic asset-protection trust can help you feel secure. Trusts have a variety of uses and protecting your assets is just one of them. When you set up an asset-protection trust, you will be protected from creditors and others who might claim you owe them money.
Types of Domestic Asset-Protection Trusts
In 2013, Utah established a new asset-protection trust statute. This provides a great degree of protection for those who create and fund an irrevocable trust. Irrevocable trusts are far more effective than revocable trusts and they are recommended for this reason.
Revocable trusts, while effective for their intended purposes of general estate planning, do not protect against creditors. This is because the person who created and funded said trust is able to amend it. This allows creditors to compel distributions from the trust if they obtain a judgment against the grantor.
Irrevocable trusts, on the other hand, provide greater protection. This is because an irrevocable trust is created by someone other than the beneficiary of the trust. However, even irrevocable trusts aren’t completely foolproof.
Who Can Benefit from A Domestic Asset-Protection Trust?
Contrary to popular belief, domestic asset-protection trusts are not merely for those with a high net-worth. While these persons can obviously benefit from a trust like this, many people in high-liability professions have started funding and creating them as well. Some of the most common high-liability professions are:
- Doctors: Doctors and physicians are often the targets of malpractice lawsuits.
- Contractors: If something goes wrong on the job site, the contractor is likely to be held liable.
- Accountants: Accountants and other financial advisors, like stockbrokers, are charged with the responsibility of protecting their client’s finances. If something goes wrong, the blame could be put on them.
While these professions come with high-liabilities, there are many other professions and situations that can benefit from a domestic asset-protection trust. If you feel you can benefit from one, then odds are you are most likely correct.
What Happens if I Don’t Have a Will? An Introduction to Utah Intestacy Law
Dying intestate, or without a will, is very common. If you die without a will, your property will go through probate and is then distributed according to Utah’s intestacy laws.
Intestacy laws govern intestate property. They go into effect unless there is a valid will to testify to the deceased’s wishes or an established estate plan. In intestate inheritance, a spouse is first in line, then children, then their children, and so on. When there are no heirs in the direct bloodline, the heirs are the parents, then siblings, then nieces and nephews, and so on.
Here are some common events that may happen if you die intestate:
Your immediate next of kin, whoever they are, will likely inherit your property first: lock, stock, and barrel. If you die intestate, everything goes to your next of kin. Your next of kin are the people who have the closest relation to you. If you’re married, then that’s your spouse. If you’re not married, your closest blood relations or equivalent, will inherit your property.
That son- or daughter-in-law you don’t like will get your property before that niece or nephew you do like. Marital property owned by your children is governed by the laws of the states they live in, not you. If they live in a communal property state, an inheritance is separate property so long as it is not commingled. While the laws are different in every state, property acquired by gift or inheritance during marriage by either spouse is separate property, but it is very easy to commingle and then become part of the community and subject to a 50/50 division.
Your heirs could be hit with inheritance taxes (that could have been avoided). The relatives who inherit from you may be subject to a large inheritance tax (both on the federal and state level), depending on the size of the estate and the state where the assets in question are held. While this won’t wipe out their inheritance completely, proper estate planning could have made this a non-issue. For example, a Salt Lake City estate lawyer could have helped you create a trust that would have minimized your loved ones’ exposure to taxes.
A little bit of money up for grabs has a very cooling effect on interfamilial relationships. In a perfect world, family members would all get along, never be jealous, and always do right by each other. This isn’t a perfect world. Intestacy laws don’t take into account the relationships the deceased had with anyone or what the deceased orally promised to someone. Even if widowed Uncle Bob told you he wanted you to have his ’65 Thunderbird, without a will, the car is going to his son…who doesn’t even have a driver’s license.
If you wish to dispute an intestacy inheritance, contact a Salt Lake City estate lawyer for assistance. They can counsel you on your rights and what course of action you can take, if any, to prove a valid claim to the estate.
Free Initial Consultation with Asset Protection Lawyers
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506