Asset Protection Trust - YouTube

Hi this is Lee Phillips. I'm an attorney. I want to talk to you for a minute about

what they call asset protection trusts. Really doesn't mean a lot to me.

However it's becoming more and more used as a trust that is irrevocable.

That means that you can't revoke it, obviously.

It also means that when you put property into it, you can't get it back.

You have given the property to the trust

and that puts it outside of your creditors reach.

It's an asset protection trust. And we have a number of these types of trusts

The Children's Trust under 2503 is a type of asset protection trust.

You give the property away to the trust.

It's then used for the benefit of the children

and technically we've given it away.

The properties is now outside of your estate. So it's always been an estate planning tool as well

because if we move an asset out and then that asset blossoms

into something of great value

it's already outside of your estate. We call that an estate tax freeze.

People aren't as worried about estate taxes these days because the estate tax limit

is a lot higher than it used to be.

So the irrevocable trusts are less popular for estate tax planning

however they are still very viable for asset protection.

Now the trust that we call an asset protection trust generally is starting to be known

as a trust that's created by a state that protects assets within the trust.

The first one was created in 1997 up in Alaska

and they created this Alaskan trust.

People always talked about the Alaskan trust.

You moved your property into the trust.

After it had been there for I think for five years, three to five

depending on which state you're in

then it locked down and it became free from the claims of creditors.

There's some problems with it. We'll talk about it in two seconds, but it was pretty good.

And why would Alaska do this?

Well, they wanted to bring money into their banking system.

The trust departments of the banks.

So you had to have a trustee of the trust which was a bank in Alaska

Now some states have passed laws which say that any resident of the state can be the trustee.

You can be a co-trustee. There are lots of variations on this

the states are Alaska, Mississippi, Ohio, Tennessee, Colorado, Delaware, Missouri, Nevada,

Oklahoma, Rhode Island, Utah, Virginia, Hawaii, New Hampshire, South Dakota and Wyoming.

Currently. And that, we may add states or they may drop off.

The problem with it is

you put the assets into the trust and then over a period of time after the period of time

then it locks down and the creditors can't get to it.

Utah actually has the best asset protection trust right now.

if you publish in the newspaper

then you can lock down the assets within 60 days

that's pretty cool guys. But that 60 or 90, can't remember, but at any rate

it locks down very quickly compared to the three to five years that many other states have.

So you lock it down

now you get a judgment against you. Well we've got a couple problems here.

One, States will not recognize laws in other states that are against their public policies.

It may be against the public policy to go hide assets in your state

for my creditors in my state.

The other thing is we have what's called Full Faith in Credit Act

which means that if a judgment is given in one state, another state has to recognize the judgement.

So if i get a judgment in this state and my creditors have access to my assets,

Will Utah not recognize that judgment and not force those assets within the trust to be given over?

There are lots of questions in this now is that

if I put a piece of property in Nevada or in Ohio into a trust in Utah,

isn't that property still going to be basically subject to the laws of the state of the state of Ohio?

The site, the state where it is?

These things we don't quite know yet on these asset protection trusts.

Relatively expensive to set up,

long period to lock down,

and they have other things that are called legacy trusts because

they will last for a thousand years

yeah right. A thousand years ago we still got 400, 500 years before the United States or

America is going to be discovered by Columbus

and you're going to manage your property for that long? I don't think so.

But at any rate, we've got all of these moving elements in these asset protection trusts

that we don't know about.

They are becoming more popular, I will give you that.

More states continue to add on their version of the asset protection trust

so it's something you need to look for, watch for, and pay attention to

because it might save your skinny someday