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There are certain jurisdictions that allow clients to set up what’s called an asset protection trust. This means it’s a trust set up by you for your benefit, and the assets within it are protected from many types of creditor claims, including lawsuits, malpractice suits, negligence suits, divorcing spousal claims, and even bankruptcy.
One of the questions we often get is whether there are other types of trusts to protect family assets and wealth. The answer is yes. Typically, this situation arises when parents have an inheritance they want to leave to their children. That inheritance should be left inside an irrevocable trust. Some people call it a descendants trust, but we usually refer to it as an inheritors trust. There are different ways to structure it, but the key is that any assets you leave to your children or anyone else inside an irrevocable trust will remain protected as long as they stay inside and the trust is structured correctly.
This type of trust can protect against creditor claims, lawsuits, malpractice suits, negligence suits, and, most importantly for many families, divorcing spousal claims. These are the biggest concerns when passing on family wealth because, even in the best of times, marriages can be challenging. Families want to ensure they’re taking care of their children and grandchildren, and that someone doesn’t run off with that hard-earned family wealth.
So, keep that in mind. And, like I said, subscribe to our channel and give us a thumbs up!