Shreya loves to cook. If you ask her, there’s very little that she can make without salt. That’s a key ingredient for her to make anything worth eating. (My cooking often comes from a box, so I can’t weigh in). When it comes to asset protection, we often tell people “you can’t do it alone.” A high level of asset protection is only achieved by having an independent third party on your team.
If you want to protect your assets, you’ll need help from someone else. It’s the salt of your asset protection recipe.
A strong asset protection plan involves you having indirect control over your assets. If you maintain direct control of your assets, there will be no asset protection.
Let’s say you are in a situation where a judge is making decisions about your assets and life. That judge can order you to take action that benefits your creditors (i.e., “pay up!”). This order includes any and all assets that are within your direct control.
In contrast, an asset protection trust provides indirect control over your assets. The independent team members, who work for you, provide you with that indirect control. These asset protection trust team members are a trustee, trust protector, or both.
An independent trustee will take care of your assets in the trust for your benefit. That means anything the trustee does, must be in your best interest. If you have an independent trustee for your trust, you will submit requests for money/assets/payments, etc. to the trustee. The trustee will fulfill your request so long as you are not being forced to make the request (via a judge or court).
Independent trust protector
A trust protector is like a watchdog for the trust. The trust protector has the ability to veto requests to the trustee. A trust protector would make this veto if they think the trust assets were in jeopardy, such as a creditor or judge trying to take the assets. They are another check to make sure that the assets are there to benefit you and your family.
For the highest level of asset protection, a trust would have an independent trustee and trust protector serving as part of the trust team.
Be your own trustee
The best asset protection jurisdictions allow you to be the trustee of your trust. They don’t require you to hire a trustee. This means you’ll be the one in charge of the assets in the trust. This arrangement works so long as there is not an active legal threat against you.
If you serve as the trustee of your trust, you must have an independent trust protector on your team. You need at least one team member. The trust protector can replace you with an independent trustee if there is a legal threat against you that threatens your assets. The trust protector role severs the direct control you would otherwise have over your assets. Remember…direct control = no asset protection.
The trust protector has the ability to veto your decisions as trustee, if the protector thinks that is in YOUR best interest. This sounds weird, but you want someone to have this control! Remember that judge ordering you to make decisions for the benefit of your creditors? You want someone to stand up for you when that request is made.
Colin Ley is an asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
Being successful in America makes you a target for bogus lawsuits from shameless lawyers. We created an effective, asset protection solution, so you don’t have to worry anymore, happily knowing your family’s future is protected. Get started now by scheduling a free, 30-minute call at livemorecarefree.com.