A trust is a contract between the Grantor (the person who creates the trust), the Trustee (one who controls the trust) and the beneficiaries (those entitled to benefit from the trust). You, as Grantor, determine how the trust will be operated by the Trustee and who benefits, how and when.
It is a common misconception that asset protection trusts, once created, cannot be changed. While that is true of many irrevocable trusts created to avoid taxes (tax reduction or avoidance trusts), it is not true of grantor asset protection trusts. A grantor asset protection trust is a trust you create for the benefit of yourself or others and once created, you, as Grantor, must give up your right to something.
Debtor/Creditor law provides that whatever you can get, your creditors can get. You can have known creditors (i.e., bank/credit card debt) or unknown potential creditors (unforeseen lawsuits, nursing home, and divorce). A typical income only asset protection trust permits you to receive the income on your assets, but you must give up your right to your principal. In a grantor asset protection trust, you can retain the right to change who gets your assets during your life and after your death, and maintain 100% control of your assets until your mental disability or death.
Tax reduction/avoidance trusts are much more restrictive than asset protection trusts. Typically, you cannot retain any right to control or access any of the assets in an irrevocable tax reduction/avoidance trust. However, grantor asset protection trusts are quite flexible and grantor-friendly. You should consult a qualified estate planning attorney to get counseled on all your options before creating a grantor asset protection trust.
Contact the Fong Law Group today at (626) 587-2088 to see which of its trusts are best for you.