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A look at different types of asset protection trusts

by | Mar 1, 2022 | Estate Planning

Different types of asset protection trusts have specific purposes. Which ones make the most sense depends on what you wish to do.

Establishing irrevocable trusts is most effective with an estate planning professional. Before meeting with one, have an idea of what methodologies will be best for you.

Medicaid Planning Trusts

This style of trust is for couples that wish to qualify for Medicaid at the same time as one spouse is still working. Assets may pass to heirs without government demands for coverage reimbursement.

Lifetime QTIP Trusts

QTIP Trusts are best for couples where one spouse has much more money than the other. Such arrangements ensure asset distribution according to the wishes of the wealthier individual. These trusts are possible by taking advantage of the gift tax marital deduction.

Family Bank Trusts

Some call these plans Spousal Lifetime Access Trusts or Lifetime Bypass Trusts. The latter name comes from the fact that they use lifetime gifts held for the benefit of both parties. Once one spouse passes away, there is a lot of leeway for distributions.

Domestic Asset Protection Trusts

DAPTs receive funding from real estate. Beneficiaries continually maintain an interest in these trusts. Even better, the assets within have protection from creditors. Not every state allows the creation of DAPTs. That said, the number of those that do will likely grow.

Asset protection is a vital piece of estate planning. Realize how important it is to keep your wealth safe in a manner that suits your needs. Consult a professional to decide the right path forward.