If you’re in debt, you’re not alone. In fact, 2017 statistics showed that the total debt for American households reached a massive $12.84 trillion, with 4 out of 5 people living in the red. For most people, their debt is usually in the form of mortgages and student loan debt, but credit card, auto and medical debt are also common – with medical debt being the leading cause of personal bankruptcy filings in the USA. Being in debt makes smart financial planning even more critical – so how to trusts work into this plan?
Will a Trust Protect My Assets?
The most popular reason for creating a trust is to protect assets from taxation and lengthy probate processes, ensuring that beneficiaries are provided for. However, a trust cannot protect your assets from creditors. If you or one of your beneficiaries file for bankruptcy, for example, the trust could be seized by creditors to pay off debts. However, there are types of trusts that can offer asset protection in these circumstances.
Irrevocable Trusts for Asset Protection
Unlike a revocable trust, an irrevocable trust can offer the type of asset protection you may be looking for. Once someone has created an irrevocable trust, they no longer legally own the assets within the trust and cannot control the distribution of those assets. The trust also cannot be modified by the creator of the trust. This means that future creditors cannot access these assets to settle a claim against your debt.
However, it is important to remember that a court can overturn the transfer of assets into a trust if it determines that the purpose of the transfer was to defraud creditors. This means that the transfer of the assets was fraudulent, and this can carry serious legal penalties. This makes it essential that you work with an experienced estate planning attorney to ensure that you have effective, legal asset protection.
Plan for Asset Protection with a Leading NJ Estate Planning Attorney
You deserve a legal solution that is uniquely tailored to your needs, so speak to New Jersey estate planning attorney Frank R. Campisano today. Whether you want to create a trust to reduce estate taxes or provide for your dependents, require a Last Will and Testament or are interested in updating more complex estate planning documents such as Medical Directives and Powers of Attorney documents, he can ensure that the right legal documentation is developed in order to meet your specific wishes.
For peace of mind estate planning or advice on creating your Last Will and Testament, please contact Frank R. Campisano or visit our website today at http://www.scclegal.com/