Asset Protection Attorney
Some say that we live in a litigious society. Our democratic society does allow people to sue others for a variety of reasons, which ranges from business lawsuits, the non-payment of debt obligations, personal injury, legal and medical malpractice, faulty construction, product defects, and more. Lawsuits brought by legitimate and illegitimate individuals can and do disrupt the lives of the person being sued, causing them to lose a portion of their assets. By using proper legal entities and ownership strategies to achieve asset protection, however, the lawsuits and claims brought by creditors cannot generally be brought to bear against the principals of the business.
There are many legal forms of asset protection that can help protect individuals from lawsuits. Some assets, like real estate or investment properties, if placed in an irrevocable trust, for example, can be protected against certain claims. Unfortunately, many people don’t think about using specific legal ways to protect their assets until after he or she has been sued. Proper asset protection is always most effective when it is put in place long before the lawsuit or creditor begins to pose a threat.
Once a person has already been sued and received formal notice about the claim, it is too late to create an asset protection trust and initiate the transfer of said assets to the trust. That’s why it’s essential for individuals to be proactive and protect their assets before receiving that lawsuit in the mail.
The irrevocable asset protection trust should specifically authorize the trustee to terminate or withhold distributions of income and principal from the beneficiary in the event of a lawsuit or bankruptcy. In the worst case, it should terminate the trust and distribute the trust assets to another pre-selected individual to protect these assets.
A transfer to an irrevocable asset protection trust is considered a taxable gift if the transfer of assets involves assets which are greater in value than the annual gift exclusion amount, which is currently $14,000. The irrevocable trust must also have its own tax identification number, so the filing of 1041 fiduciary income tax returns will also be required. Fortunately, the terms of the irrevocable asset protection trust are private, and not recorded public documents.
To learn how you can create an asset protection trust, contact Citadel Law Corporation at (800) 662-0882 today.