Protect yourself and your assets though a South Florida law firm

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In the United States, there is an ever present risk of frivolous lawsuits. Therefore, more and more individuals with high-value estates are deciding to utilize strategies to protect their assets. An irrevocable trust is one strategy commonly used to protect assets.

A trust is an artificial entity recognized by law whereby one party places assets within the trust for the benefit of another person. In a trust, the individual who deposits the assets into the trust is specified as the settlor or grantor, and the person who receives the assets is called the beneficiary. The typical trust includes the parents as the grantors and their children as the beneficiaries. A third party designated as a trustee will oversee the assets of the trust Assuming the trustee adheres to the trust agreement's terms, they are authorized to buy and sell the assets held in the trust. Typically, the state in which the trust is established will have stringent rules that the trustee must follow concerning their duties in protecting the assets of the trust.

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Trusts can be classified as revocable and irrevocable trusts. The grantor can terminate a revocable trust at any time, so these trusts tend to be utilized instead of a will in order to sidestep the probate process. For this reason, these types of trusts won't be ideal for protecting one's assets.

Being that the trustee assumes all contol of the trust property from the settlor, the irrevocable trust is a much stronger asset protection mechanism. As a general rule, the assets in an irrevocable trust cannot be part of a lawsuit judgment. For this type of asset protection to be valid, the grantor should not also fill the position or trustee or sole beneficiary.

Transfers to irrevocable trusts must be made with care. Fraudulent conveyance is the term for any transfers into an irrevocable trust later found to be in expectation of a lawsuit or fraudulent actions; these transfers will be declared void. Therefore, experts advise establishing such a trust well ahead of any possible litigation.

If creating an irrevocable trust for tax purposes, be very aware of the ramifications. Irrevocable trusts are required to file a federal income tax return, and the rate is typically higher than the individual rate.. Plus, estate or gift taxes may apply to any gifts received by a trust. There do exist methods of structuring activities that remove the assets from an estate without being subject to taxes, for example, organizing an intentionally defective grantor trust, but this structure will usually not offer asset protection.

For anyone searching for a way to protect their loved one's prospects regardless of any possible health issues or legal issues, irrevocable trusts can be extremely valuable. Before deciding if this strategy is right for you, it would be advisable to seek the advice of both an asset protection attorney and a tax attorney. florida asset protection attorney

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