What is asset protection trust? What is trust?
A “TRUST” is nothing but a “Contract” between the person who wishes to protect their property (the grantor) the person who will manage assets (trustee) for the benefit of all Beneficiaries which can include the grantor, his spouse children and grandchildren.
The Trust Contract requires the transfer of assets from the original owner (the grantor) to legal entities for the purposes Trust Contract was created.
What type of trust, grantor or non grantor? What is the distinction? A grantor Trust take a special place in the tax code. A “grantor-Type Trust” for tax purposes be considered as legal entities. The unit is considered “Income Tax Neutral” meaning that the original grantor retained Strings Attached so in order to IRS he holds assets in full control of it, so he did nothing in order to protect property.
compensation income and income tax rates are kept by the grantor, thus he pays income tax on income trust. The Trust is a “pass-through” to form in 1040 ie real estate tax rates and mortgage interest deductions by his own personal income tax return.
revocable, irrevocable trust, what is it then? Revocable is when the original person with the assets transfers (repositions) the assets of the fund with strings attached. Grantor, the trustee and the recipient are the same person. In fact, you’ve kissed your hand and blessed yourself as the pope. A revocable trust does absolutely nothing to protect property. Many lawyers recommend revocable trust to avoid inheritance documents, recognize that trust is not worth the paper it is written on to protect assets against frivolous lawsuits and the avoidance of estate taxes.
An irrevocable trust is when the grantor (the assets) gives up full control of an independent trustee who then will use judgment trustee to manage the assets for the beneficiaries of the trust. The fiduciary relationship trustee for the protection of property at any cost. The trustee must protect and must diligently invest under the prudent man rules, he can not always deal for themselves.
Courts do not look good on dereliction of duty while serving as trustee. Irrevocable trust is the only significant asset protection device to avoid frivolous lawsuits, avoiding genetic documentation process, avoid estate taxes, and is the only device to avoid mandatory spending down provisions for qualification into a nursing home.
irreversible asset protection trust, when combined with the corporation’s asset protection fortress, short of foreign asset protection trust. A protection of foreign asset position of trust is the Rolls Royce of protection of property, irrevocable trust LLC is Cadillac.