There are primarily two types of asset protection trusts.
Self-Settled Asset Protection Trusts
The first type of trust is one in which a person creates the trust for the benefit of himself or herself. This is known as a self-settled asset protection trust. At common law, it was impermissible to put your own money in a trust to protect it from creditors. Accordingly, up until 1997, if you wanted to create a self-settled asset protection trust, you would need to set it up in another country. These were typically referred to as offshore asset protection trusts and were quite popular with ultra high net worth individuals. Today, there are sixteen states that allow self-settled asset protection trusts, with the most common being in South Dakota, Delaware and Nevada. To some extent, Alaska, which had been the leader, has fallen out of favor for a variety of reasons.
Third Party Asset Protection Trusts
The second (and more common) type of trust is one in which a person creates a trust for the benefit of other people, usually the person’s heirs. This is known as a third party asset protection trust. Third party asset protection trusts are frequently created in conjunction with a client’s overall trust plan. Specifically, it is quite common to form a life insurance trust as an asset protection trust. There is usually no need to send third party asset protection trusts offshore as they are highly protected from creditors. However, a tax advantage may be had by creating them in another country.
We WILL NOT help you to transfer assets subject to a claim from an existing creditor, so please do not ask