An asset protection trust is an estate planning vehicle that effectively guards your assets from creditors. It is an irrevocable trust created by an individual that can protect assets from lawsuits, civil actions, and divorce claims. Assets within this type of trust are no longer considered to be your property, so creditors are unable to touch them. An experienced lawyer can help you determine if an asset protection trust is right for you, and which type of trust best aligns with your unique goals and objectives.
The Types of Asset Protection Trusts
There are a number of asset protection trusts. Each fulfills a very specific role, and it’s important to understand what makes each type unique.
Domestic Asset Protection Trusts
Although asset protection trusts are not recognized in Pennsylvania, residents of Pennsylvania can create Qualified Personal Residence Trusts, Grantor Retained Annuity Trusts or locate the trust in states such as Delaware that recognize and enforce these types of trusts.
Although asset protection trusts are highly effective at protecting your resources from creditors and lawsuits, they cannot protect you from outstanding claims that existed before the trust was established.
Medicaid Asset Protection Trusts
By putting assets in a Medicaid asset protection trust, you may be able to prevent those assets from being counted toward your eligibility for Medicaid. This can help you protect assets for personal use while you are alive, and preserve assets for beneficiaries, upon your passing.
A Medicaid asset protection trust must be established at least five years before applying for Medicaid. If you set it up and then apply for Medicaid before that five-year mark, those assets will not be protected. An experienced estate planning lawyer can help you protect your assets from being depleted by Medicaid.
How a Pennsylvania Estate Planning Lawyer Can Help
There are multiple types of asset protection trusts to choose from, and several factors to consider when deciding whether these estate planning tools are right for you. An attorney can help you navigate this complex process, including determining if you need to create an LLC, how to fund your trust, and whether there are tax implications.
Contact Reager & Adler, PC Today
Asset protection trusts can provide significant benefits to certain individuals. If you are considering incorporating this type of trust into your estate plan, it is critical to work with an experienced estate planning attorney. At Reager & Adler, PC, our legal team understands the benefits and implications of these trusts and how they work in accordance with Pennsylvania state laws. Contact us today for a confidential consultation.