Estate Planning | In Florida, an asset protection trust is one of the most common forms of estate planning. As you’re preparing for care in the second half of your life, you may be encouraged by an elder law attorney to look in to an asset protection trust. But what are the benefits, and is it the right move for you?
An asset protection trust is an agreement established by the debtor to protect assets from potential civil judgement. This is designed to protect assets from litigation surrounding negligence — either professional or personal — as well as any incidences like car accidents or nursing home debt. This is also beneficial to protect the assets of the surviving spouse as well.
There is often a misconception that an asset protection trust is only needed for wealthy individuals, but that isn’t always the case. There are several benefits to an asset protection trust, including tax benefits. The IRS doesn’t tax an asset protection trust the same way they would a traditional irrevocable trust. Another benefit is that a Florida asset protection trust is discretionary, meaning the trustee is never required to distribute income to a principal beneficiary.
An asset protection trust is also beneficial if you plan on applying for Medicaid in the next five years, as it will not affect Medicaid eligibility.
Unlike traditional irrevocable trusts, the Florida asset protection trust allows for modifications like adding or changing protectors. You can also transfer other assets in your named like annuities, bonds, personal property and other assets that you own yourself.
If you are considering the financial benefit of an asset protection trust, contact The Law Offie of Michelangelo Mortellaro for a confidential consultation on your estate planning needs.