subject: Understanding Functioning Of Domestic Trusts [print this page] How do you protect your assets by keeping it safe in the bank? Do you think doing that can help protect your property from lawsuits? Suppose your marriage hits rock bottom and you file for divorce. Your spouse may claim half of the property, if you were a resident of the US states like Arizona, Texas, California, and so on.
Why choose a trust for estate planning? You may think that signing a prenuptial agreement is the only way to avoid such a situation. However, there may be certain reasons that deter you from opting for such an agreement. Some of the common arguments against this kind of an agreement are:
Embarrassment in asking your soon to be spouse to sign a prenuptial
Disinterestedness in full disclosure of finances
Difficulty in establishing the terms, and their implication, of the prenuptial
What can be an easier solution? Domestic asset protection trusts can help in this regard.
How does it work? It is very similar to functioning of an asset protection trust offshore. However, it does not come with the hassles and costs of establishing and managing a trust in another country. Moreover, some people are not comfortable with moving their property out of the country.
Advantages of this device - The chief advantage of the trust is to protect your assets from the adverse effects of post-divorce property division. Though you do not sign a prenuptial, you have no difficulty in protecting your assets if there is indeed an unfortunate happening like divorce. Apart from this, there are other advantages as well:
It does not require transfer of assets to foreign country
It does not require financial disclosure
It is hassle free and less expensive
It gives you the right to be a beneficiary of the trust
It need not be divulged to your soon to be spouse
Similar to all estate planning techniques, domestic asset protection trusts need to follow certain guidelines to be valid. The first thing is that such a trust is unchangeable, legal term for it is irrevocable, in nature. It must have a trustee who is a resident of the state of the creation of the trust.
It is necessary to get in touch with an estate-planning lawyer specializing in creating such trusts. Only he can help you plan the whole thing keeping in mind the federal and state laws and statutes.
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