If you looking to protect your money, a Self-Settled Spendthrift Trust might be the right solution for you. What is a Self-Settled Spendthrift Trust? Like most Trusts, a Spendthrift Trust is a overseen by a Trustee.
The Trustee manages the funds and distributes them to the beneficiaries according to the instructions or wishes of the original trust creator. One major difference from other trusts is that Spendthrift Trusts prevents future creditors from accessing those funds. The addition of the “self-settled” designation means that the creator and the beneficiary are the same person. This type of Trust is one you would set up to protect your own funds. A Trustee is still named, but the beneficiary is the one who placed the funds in the trust.
If your desire is to protect your assets, then this type of Trust might be the solution. Because creditors can only access the funds that have been released, all the remaining monies stay out of reach. Neither future creditors nor future ex-spouses can touch the bulk of the Trust money. Professionals which may face future personal lawsuits such as those in the medical field, lawyers, or business owners may find Self-Settled Spendthrift Trusts a solution to their fear of lawsuits. Self-Settled Spendthrift Trusts are also a good option for those with a large sum of money which they want to access portions of themselves as well as pass on to beneficiaries free of estate taxes. Blake Harris Law can help work out the details with this type of wealth-transfer situation, so you can make use of a lifetime gift tax exemption but still access the money. A few cautions:
Self-Settled Spendthrift Trusts cannot be made in hindsight. Once you have a creditor seeking repayment, you cannot make the Trust to avoid or hinder collection.
This must be done in advance, and not just days in advance. These legalities were put in place to keep people from defrauding creditors. Choosing a Trustee is a significant decision, however, you will initially be able to serve as a Trustee of your Trust and as Trustee, you will have ultimate distribution decisions. Creating a Self-Settled Spendthrift Trust is one that should be done with the professional advice of an Estate Planner. Each state has specific guidelines and statutes which must be followed to make the trust most protective and beneficial to you. Relying on the expertise of an attorney will help you make the choice to create a Self-Settled Spendthrift trust with full knowledge of all the ramifications. For more information about how estate planning can benefit you, contact us. We are committed to protecting your assets now and for future generations.