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An Introduction to Utah Asset Protection Trusts

Posted by Will Harnish | Jan 24, 2022 | 0 Comments

A Utah Asset Protection Trust is a fantastically useful tool. When used properly, an asset protection trust can shield your property from future creditor claims.

So, what is a Utah asset protection trust? Allow me to illustrate by sharing a few examples of situations I have been asked about.

Example 1: Existing Problems

A judge orders a lien placed on all of George Bluth's property for shady international dealings and George now wants to remove his name from certain assets so they are not part of the lien.

Or, Jonny Rose calls and explains that he is headed straight for bankruptcy and needs to hide some assets.

Or, Myron Mertz just returned from a taping of Maury and learned that he is the father and now needs to hide some assets to reduce potential child support payments.

In each situation, an asset protection trust cannot help. Transferring property when a claim has already been filed or when you can reasonably foresee a problem with a creditor or claimant would be a fraudulent transfer. These types of transfers are easily voided and may get you into even more trouble.

Example 2: Proper Planning

Leslie Knope set up an asset protection trust five years ago and transferred $200,000 into an account owned by the trust. Due to an unfortunate hunting accident, she is sued and loses all her assets. The claim cannot extend to the asset protection trust despite Leslie being the sole beneficiary. While Leslie tries to rebuild her life, the trustee can use the trust's property to pay Leslie's living expenses.

Example 3: Surrender of Control

Angela Martin loves the idea of an asset protection trust, as she can still direct how the assets are invested and grown despite the assets not being in her name anymore.

She is having a hard time, however, with two things. First, the trust is irrevocable, which means that she must be 100% sure that she is committed to the whole asset protection structure and how property passes once she has died. There are very limited circumstances in which changes can be made once the trust is created.

Further, she learns that she must appoint someone else to be a trustee who has total discretion over when distributions are made and for how much. Angela may serve as a co-trustee with certain powers, but she may not serve as the sole trustee.

Conclusion

The basic idea behind the Utah asset protection trust is that you must give up some control over property to protect that property against future creditors. You can essentially preserve a source of funds for yourself. Think of this tool as a self-funded insurance policy for hard times.

There are many considerations to factor when determining whether this tool is right for you, as well as more information that can't be contained within one introductory blog post.

If you are interested, schedule a free consultation with Will (HERE) and we can discuss your unique situation and get you comfortable with the next steps.

About the Author

Will Harnish

Will is a client-focused estate planner whose goal is to instill confidence in his clients.

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Knowledge and Experience

With Juris Doctorates from Harvard and the University of Wyoming, and with advanced post-JD-LL.M. education in taxation from New York University and Boston University, Ephraim and Will are among the most qualified tax and estate specialists in Utah.

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