I am an asset protection attorney, a tax attorney, and a law school professor. I recently wrote an article about a revolutionary technique for creating a better asset protection trust. I call this a "Special Power of Appointment Trust." Not only is a Special Power of Appointment Trust safer and more confidential than any other asset protection trust on the market, it is also more reliable because it is based on old laws that are battle tested and consistently upheld in all fifty states as well as the federal bankruptcy courts and with the IRS.
I have created hundreds of asset protection trusts using this technique. Almost always, the trust remains completely off the radar of potential creditors because the trust creator has no legal, equitable or beneficial ownership in the trust. Even if a creditor becomes aware of the trust's existence, they have no claim against the trust because the debtor has no interest in the trust.
The text of the entire article is found here: www.assetprotectionatty.com/articles/42-building-a-better-asset-protection-trust.
For those who prefer a short summary, the Special Power of Appointment Trust includes the following features:
1. Almost all other asset protection trusts are designed as a "self-settled trust," meaning that the creator is included as a potential beneficiary of the trust. The asset protection offered by a self-settled trust is under attack. New bankruptcy laws provide a ten-year look back period for fraudulent transfers to a self-settled trust. At least two bankrutpcy courts have found a self-settled offshore trust to be unenforcable because it is against public policy. A series of cases involving offshore trusts (all involving self-settled trusts) have resulted in clients being sent to jail for refusing to turn over the assets of the trust. Onshore self-settled asset protection trusts have never been tested in court and many attorneys question whether they will hold up. In contrast, the Special Power of Appointment Trust provides the same benefits as a self-settled trust without any of the risks mentioned above. Furthermore, the laws pertaining to a Special Power of Appointment Trust have been upheld consistently in all fifty states and in the federal bankruptcy courts for centuries.
2. Your Special Power of Appointment Trust may own an LLC with you as manager, so you are the only person with knowledge, access or control over the assets of the trust.
3. You can appoint one or more of your friends, siblings, children, or trusted advisors to fill the following offices:
a. The "trustee" will have signing power for the trust. The trustee will have discretion to distribute assets to the beneficiaries (but only with your consent), and only if you transfer assets from the LLC to the trust.
b. The "donee" will have a special power of appointment that allows them to appoint assets back to you or any other person (with your consent). This provides a way for assets to be transferred to you at any time and in any amount, even though you are not a beneficiary of the trust. This is the magic that makes this trust better than all other asset protection trusts.
c. The "trust protector" has power to replace the trustee and the power holder and to make sure they can't do anything without correct approvals. This ensures that the trust cannot be used in a way that you did not intend.
4. Unlike a self-settled trust, the protection from a Special Power of Appointment Trust is unassailable in any jurisdiction. This means that you can save a bundle in trustee fees and you can avoid the negative stigma that comes from having a trust in an exotic jurisdiction. Still, some jurisdictions are better for other purposes, and this should be carefully considered in the process of designing your trust.
5. If you are sued, divorced, bankrupt, or subject to scrutiny by government agencies, you may be asked to disclose all of your assets and any trust of which you are a beneficiary. Because you are not an owner or a beneficiary of your Special Power of Appointment Trust, the trust should not be included among your assets. Even if the trust existence is discovered, the trust and its assets are irrelevant because you have no legal, equitable, or beneficial interest in the trust.
6. If funded in advance, a Special Power of Appointment Trust will protect assets from creditors, divorce, bankruptcy, government agencies, or any other threat to you or the other beneficiaries for multiple generations. Even though the trust is irrevocable, the special power of appointment provides complete flexibility, allowing the donees (with your consent) to change the conditions, the timing, the amounts, and the identity of the potential beneficiaries of the trust.
An asset protection trust must be funded in advance of a problem or the transfer will be avoided as a fraudulent transfer. If an asset protection trust is used in an ethical and professional manner, it can provide tremendous security and peace of mind to you and your family.
This explains why my special power of appointment trust is safer and more confidential than all other asset protection trusts. Please call me at (801) 765-0279 or send me an email at lee@lsmlaw.net, and I will design a plan that is best for you.