These Are the Reasons to Put Your Property Under Trust
Landowners in England devised a clever plan to protect their property from creditors in the 1500s. They transferred ownership of their lands to trusts that would manage and protect these properties. And if they died, the trust would distribute the property among descendants as directed by a will.
While a measure of wealth was in land in the 16th century, wealth is now diverse and includes real estate (land and buildings), vehicles, jewelry, art collection, and bank accounts.
However, the original idea of putting wealth under trust to protect it still survives today. A trustee will manage and protect your wealth and ensure you derive benefits. If you die suddenly, the trustee distributes your wealth among your children without estate disputes.
Trusts remain essential in estate management and protection. You’ll need a trustee to protect your assets from unforeseen circumstances. Here are reasons why assets under trust could remain yours and generate income.
Protection from Lawsuits and Legal Claims
The main reason to put your property under an asset protection trust is to protect it from legal claims. By transferring ownership of your property to a trust, what you’ve transferred becomes the trust’s property. What’s more, the trust becomes responsible for managing and protecting your assets.
Some lawsuits restrict property sales; Lis Pendens (Pending Lawsuit) is a classic example. If you’re facing such a lawsuit, you’ll be glad you transferred ownership to a trustee.
Divorce Filing and Proceeding
Even as you wed the love of your life, you want to prepare for the worst. Relationships change over time, and some irreconcilable differences could mean you’re heading for divorce. When your spouse files for divorce, it could mean dividing your assets during a settlement.
However, transferring your property to an asset trust protects your property from distribution in a divorce settlement. You want to transfer your assets to an irrevocable trust for this protection. This trust also protects your assets from creditors.
The timing of setting up a trust is crucial. While you can transfer ownership before or during marriage, you want to talk to a professional attorney first. The attorney will draft the trust documents in a language that addresses the uncertainties of asset distribution.
Protection from Civil Action Lawsuits
If you live in a country with a reputation for creating a litigious environment, you are better off preparing for any lawsuit. You’re never safe from a lawsuit, especially in this digital era when your company might lose customer data to cybercriminals.
A trust can protect the assets you’ve spent a lifetime acquiring from unforeseen frivolous litigation. The trust will prevent claimants from demanding seizure of your assets. Irrevocable trust offers the best protection. However, it limits your control of the assets. You can also opt for a revocable trust that’s more flexible. But before choosing any trust, ensure you consult an attorney to get legal advice.
Conclusion
If you’ve spent many years acquiring assets, you want to protect them at all costs. The best way to protect your wealth is by transferring ownership to a trust. The trust will manage and protect your assets while ensuring you benefit from your assets.
You can choose a revocable or irrevocable trust. But before opting for a trust, seek legal counsel first. The right trust will protect your assets from lawsuits and divorce, among other unforeseen circumstances.