How does an asset protection trust work?

An asset protection trust is irrevocable, meaning that any transfer of assets into the trust is permanent. In other words, the trust would own the assets in question and they would be managed by the trustee. By removing those assets from your ownership, you can protect them against creditor lawsuits.

What is the best trust for asset protection?

irrevocable trusts
For maximum flexibility, a revocable trust is best because you can adjust it as many times as you like while you’re alive. In general, irrevocable trusts are best for those who have extensive assets, since these trusts offer greater tax benefits and asset protection.

What assets are protected in a lawsuit in New York?

New York exempts “all trusts, custodial accounts, annuities, insurance contracts, monies, assets or interests established as part of, and all payments from, either any trust or plan, which is qualified as an individual retirement account” by IRS tax-exemption law.

Do trusts provide asset protection?

Although revocable trusts do not offer asset protection, they have other benefits when it comes to estate planning. For example, such trusts can be helpful in avoiding probate fees when the settlor passes.

Can a trust protect assets in New York?

Certain trusts, however, can be used to potentially protect assets against the claims of the beneficiary’s creditors. I. Self-Settled Revocable and Irrevocable Trusts. In New York, an individual cannot protect assets from creditors by creating either a revocable trust or an irrevocable trust for his or her benefit.

What do you call a Medicaid asset protection trust?

Medicaid Asset Protection Trusts are also referred to as Medicaid Planning Trusts, Medicaid Trusts or less formally Home Protection Trusts. It is important to understand that there are many different types of trusts and not all of them are Medicaid compliant.

Who are the trustees of an asset protection trust?

The trustee is the manager of the trust and controls the assets in the trust. While neither trustmakers nor their spouses can be trustees, adult children and other relatives can be named as trustees. They must adhere to the rules set forth by the trust, which are very specific as far as how the money can be used.

Are there any self settled trusts in New York?

New York has a policy against self-settled trusts and does not permit their creation in New York. However, New York must respect the laws of another state, therefore there are many of these trusts done by New York residents, in the hopes that their assets will be protected.