One way in which an individual can protect his/her asset is by establishing an asset protection trust. There are a number of different types of asset protection trusts that an individual can establish, and a variety of different purposes behind the creation of these trusts. A trust is a legally binding agreement that transfers the title of assets or the right to assets from one individual to another.
The individual who is named as the trustee of a trust will obtain the responsibility of overseeing the assets, usually monetary funds, which are specified within the agreement. When a trust is created, the granter must specify what purpose the included assets are to be used for. In addition, he/she will likely be able to delegate the use of these assets during his/her life. In many instances, an asset protection trust can help to protect an individual’s assets from creditors.
An asset protection trust can also be established by an individual, for a loved one. In most cases, a parent will establish a trust for his/her children, so that in the event that he/she dies, the children will have access to the monetary funds necessary to attain support.
The granter will name an adult to be the trustee. The individual who becomes the trustee is responsible for managing the funds until the beneficiaries reach the specified age. Subsequently, the children will gain control of these funds. Trusts are often used to ensure that large sums of money left in inheritances remain secure until the beneficiaries gain the experience necessary to manage these funds responsibly.