Asset Protection Trust

An Asset Protection Trust (APT) is designed to protect your important assets (homes, family heirlooms, valuable items, etc.) from being sold against your wishes for any reason.

What is an Asset Protection Trust?

An Asset Protection Trust is a valuable method of managing and protecting your estate from potential threats. It is a measure you can undertake to ensure that your assets can, when the time is right, go to their intended destination without needing to worry about creditor intervention.

This type of trust is irrevocable and must be created prior to death. Your APT will offer the strongest possible protection for your assets from any and all creditors, lawsuits, and judgements that may arise against your estate at any time.

Once assets are entered into a protection trust, they cannot be removed against the wishes of the settlor.

Generally, people will place their most valuable, most cherished assets into trust. This can include:

  • Property, such as the family home or any holiday property (this can include a share in a house if it is jointly owned)
  • Capital above £14,250 (anything below this is not considered for means testing so would not need to be placed into the trust)
  • High value investments
  • Family heirlooms

When placing any assets into an Asset Protection Trust that attracts capital gains tax, it is important that you remain cautious.

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Once you’ve weighed up your options, an Asset Protection Trust can go a long way towards guaranteeing your loved ones futures, no matter the circumstance. Click below to get in touch.

How to Set up an Asset Protection Trust

When setting up an Asset Protection Trust, it’s important that you do ample research into both what form of Asset Protection Trust you require, and into finding the most appropriate consultant for your needs. Once you have completed your research, you can switch your focus to drafting your trust, transferring assets, and the trust’s continued management.

The process behind the creation of an Asset Protection Trust should include the following:

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Research

As with anything, when you’re in the process of creating your own estate plan, it is absolutely vital that you do enough research to ensure that you are making the right decisions for your situation. This should ensure that your assets are protected appropriately.

Although an Asset Protection Trust is an excellent way to safeguard your assets — and therefore your loved ones’ future inheritances — it can be somewhat expensive. Therefore, it is vital that you carefully consider your options to ensure that you make the correct choice for both you and your beneficiaries.

Another factor that you are advised to research meticulously is who you approach for assistance. Setting up an Asset Protection Trust is an extremely difficult process. Failure to correctly create your trust could leave your beneficiaries facing a high amount of inheritance tax.

When you’re looking for a consultant, it is important that you find someone that you can trust. Your consultant should have experience handling the issue you are faced with, as well as clear expertise and sound knowledge regarding the intricacies of APTs, and what the laws are where you live.

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Document Creation

The actual act of creating your Asset Protection Trust documents is, for the most part, fairly similar to creating any other form of irrevocable trust. Important parts in the process include choosing a trustee, naming your beneficiaries, and clearly detailing which assets go where.

While creating your APT documentation, it is also essential that you include the specifics of how your trustee should manage all of the assets held within the trust on behalf of both you and your beneficiaries.

Assets that can be considered for inclusion within your Asset Protection Trust could include:

  • Money
  • Securities
  • Real estate
  • Businesses (as well as their assets)
  • Vehicles
  • High value assets such as heirlooms, jewellery, art, etc.
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Fund Transferring

Transferring your funds and assets to the APT is a pivotal part of the process. To do so properly, it is important to have a highly skilled, experienced, and trusted consultant alongside you.

When transferring your funds and assets into the trust, there are a number of possible questions that will be asked of each one. Considerations such as how the asset will go on to be affected by taxation, growth, spousal death, etc. must all be taken into account. Be sure to discuss such factors with your consultant.

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Management of your Trust

Once the documentation is in place, and the assets are entered into the care of the trust, the next step will be the management of your trust. Trusts are managed by the trustees on behalf of all beneficiaries. The role of a trustee includes the following:

  • Administer the trust in accordance with the guidelines set out
  • Management of the assets of the trust — including the tax affairs of the assets
  • Comply with all laws surrounding the trust
  • Have regular correspondence regarding the state of the APT
  • Distribute funds/assets
  • Regularly keep record of the assets held within the trust — taking into account any fluctuations in value

Benefits of Setting up a Trust to Protect Assets

Advantages of setting up a trust to protect assets in the UK include:

  • Keep your property safe from any and all creditors down the line
  • APTs are irrevocable, meaning that they cannot be reversed once created
  • Probate is not necessary
  • Avoid care costs (as long as deprivation of assets is not the purpose of the trust’s creation)
  • Keep control over the assets prior to your death
  • Potential tax benefits
  • Maintain control over your family home for loved ones
  • Safeguard your children’s inheritance through a divorce.
  • Protect assets down the line in the event that beneficiaries divorce.
  • Only named people can inherit assets
  • Prevent claims against your estate
  • Reduce lengthy court proceedings and costs
  • Avoid compromising the benefits status of dependents

Make Your Trust Today

If you are considering the future of your estate, and wondering how best to support your loved ones, contact a consultant today to discuss how a trust could benefit you.

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    Alternative Trust Services

    Depending on what assets you are looking to pass on, who your beneficiaries will be, and what control you wish to have over your assets, there are a selection of different trusts to choose from. Aside from an Asset Protection Trust, you also have family trusts and property protection trusts.

    Family Trusts

    Family trusts are specifically designed to benefit your loved ones and ensure that they can make the most of their inheritance. They give you significantly more control than other trusts, can be altered at any time, you can name yourself as trustee, etc.

    Property Protection Trusts

    Property protection trusts allow you to put specific instructions in place regarding what happens to your property once you have passed. Often this comes in the form of a child only receiving an inheritance once the surviving spouse dies.

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    Frequently Asked Questions

    How Does an Asset Protection Trust Work?

    Asset protection trusts work because once you have placed assets within them they are, effectively, no longer considered as part of your estate. Therefore, should you be in any legal trouble down the road, creditors are not able to seize these assets.

    How Much Does an Asset Protection Trust Cost?

    The price of an Asset Protection Trust will depend on your specific needs and wishes, the size of your estate, and the possible complications surrounding it. Since Asset Protection Trusts are not appropriate for everybody, it is important to discuss your needs with a consultant before signing anything.

    Just Wills & Legal Services will discuss all of this with you in an initial consultation before advising accordingly on cost.