Colorado Asset Protection Trust vs. Wyoming Trust

Asset Protection




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Colorado Asset Protection Trusts

If having health, home and car insurance seem obvious, then why not insure your other assets, too? You can create a trust for yourself, family or charity. An asset protection trust is not limited to estate planning You may enjoy asset protection during your lifetime, with the trust becoming the foundation of an estate plan over time if you so desire.

Common trust misconceptions include the idea you lose control of the assets, cannot name yourself as a beneficiary, or you must establish an offshore trust. Properly forming a domestic asset protection trust avoids the above pitfalls.

People assume a credit event won't happen to them, but of the following list chances are most of us will experience at least one during our lifetime. Such events include, but are not limited to, frivolous lawsuits, aggressive creditors, divorce, accidents and good old fashioned bad luck. Each is an opportunity for a third party to attack your assets. Some of these events are foreseeable and others aren't, but given such odds it makes little sense to roll the dice.

Who Uses Trusts

The most common reasons people form trusts are:

    Asset Protection: Trust assets cannot be taken by creditors.
    Taxes: Trusts can minimize or avoid many types of taxes.
    Privacy: Our trusts are anonymous and allow private ownership of assets.
    Estate Planning: Avoid probate and ensure those you care for are responsibly taken care of.

The structure we establish for you is dependent upon your particular needs. Do you want to provide for your children, or have a child that cannot reasonably manage finances? Do you fear a personal credit event, such as divorce, a car crash or bankruptcy? Is charity your passion?

Each of these situations call for a specially crafted trust which meets your needs. The trust will protect assets while you’re alive, and can function as the foundation of an estate plan.

A trust can have many uses; for example, protecting assets, anonymously owning assets, avoiding probate, minimizing taxes, providing for grandchildren or charity and more.

Our Colorado trust attorney’s purpose is to listen to your needs and find a solution that fits. Whether that’s a revocable trust, irrévocable trust, special needs trust or an asset protection trust for your self.

Trusts protect both personal and business assets while enhancing your privacy. Our trusts are anonymous which in turn makes you less of a target for treasure hunters. We draft Dynasty, Self Settled, Medicaid and other trusts. We like to say there are as many types of trusts as there are people and their situations.

What is a Trust?

A trust is an agreement between two or more people. Namely, the agreement is between the person who creates the trust and those who benefit from it. The person who creates a trust puts assets into it for a specific use, the trust owns the assets and the assets cannot be taken by creditors.

Every trust has three parts. They are:

    Settlor: This is the person who creates the trust.
    Beneficiary: The people who benefit from the trust.
    Trustee: The person who oversees or manages the trust assets.

Assets That Can be Protected

The benefit of a trust, versus an LLC or Corporation, is that it can be used to protect not only business assets, but personal assets too. You cannot put your home into an LLC and expect protection, but that is just fine with a trust. Protectable assets include:

    Personal Home
    Real Estate Investments
    Securities, Stocks & Bonds
    Intellectual Property
    Savings & Checking Accounts
    LLCs & Corporations
    Alternative Currencies, e.g. Bitcoin
    Antiques & Collectibles
    & More

Who Sets Up Asset Protection Trusts

Trusts have been used for hundreds of years by anyone who is serious about asset protection or leaving a legacy. They are not solely the domain of High Net Worth Individuals. We have set up trusts for many individuals and families with less than a million dollars.

Trusts are commonly used by those who:

    Own businesses in risky industries

    Trust law favors those who plan ahead.

    Colorado Estate Planning

    A Domestic Asset Protection Trust can fulfill both asset protection needs during your lifetime, and responsibly provide your descendants. These goals are not mutually exclusive and we are happy to assist you with achieving both. Our Colorado Trust Attorney specializes in crafting estate plans which work during your lifetime and after.

    The Solution: Stacking the odds in your favor

    Domestic Asset Protection Trusts are designed to deter present and future creditors. This deterrence may lead a creditor to decide that either bringing a lawsuit will be too costly and time consuming or will force them into settling for much less than would otherwise have been possible.

    Structures your assets in a manner designed to simultaneously preclude seizure by third parties while still allowing you to benefit from said assets.

    Trust Law

    Trust law isolates ownership, control and the benefits of an asset from each other. In practical terms this means you can benefit from an asset, and control it, without directly owning it. This division of ownership prevents your personal creditors from seizing assets held in trust. There are three parts to a trust:

    1) Settlor/Grantor: This is the person who creates the trust and puts assets into it; 2) Trustee: This person or company manages the trust; 3) Beneficiaries: These are the people who benefit from the assets held in trust.

    administers/controls them and a party of your choosing (you) benefits from them. Domestic asset protection trusts create a distance between you and your assets and any possible distributions.

    This distance creates a barrier between your creditors and the assets in question. This barrier can create sufficient reasonable doubt to deter creditor claims altogether, will give you a stronger position to bargain from and will at the very least buy you precious time.

    These trusts, given you form the trust and are its beneficiary, are called self-settled trusts:

    1. State laws govern trusts
    2. Anyone may form a trust in any state
    3. States must respect each other's laws.

    Thus, you may form a trust in a state of your choosing and it cannot simply be invalidated because it doesn't conform to another state's laws, usually the state you or your creditor resides in.

    The first DAPT statute was ratified by Alaska in 1997. This is why such trusts are still often referred to as Alaskan Trusts, regardless of where they're formed. To this date, no creditor has pursued a DAPT through the whole court system. This is, presumably, due to the fact creditors assumed the domestic trust would ultimately stand up to scrutiny.

    There are two cases to consider. First, if you reside in one of the # states with DAPT laws (x,y,z) then a properly created and funded DAPT will work. Nonresidents, on the other hand, still face the uncertainty of what should happen should the plaintiff refuse to settle and pursue the matter all the way through the court system. This uncertainty, though, creates doubt in your creditors mind as to whether the possible eventual pay off is worth the intervening effort and cost.

    An asset protection strategy should be considered successful should

    1. The creditor avoid filing a lawsuit altogether
    2. The creditor settles for less than is owed

    Don't allow the perfect to be the enemy of the good, a little bit of uncertainty should not deter you. Often those disliking certainty engage in no asset protection at all, and then the only certainty is that you'll have no protection from creditors. No strategy provides a 100% guarantee of success. The goal is to use all available techniques to stack the odds in your favor.

    Types of Trusts

    While each trust is a custom drafted document, there are a few general types of trusts and characteristics that we tend to blend in. Some trust types, in no particular order, are: Dynasty Trust: A trust designed to last over many generations. These can take care of grandchildren, or charities far into the future. The maximum allowed lifetime is 1,000 years. Self-Settled Trust: An asset protection trust where the person who creates it is also the beneficiary. These were previously only available offshore, but a number of States now allow them. Charitable Remainder Trusts: Land Trusts: Revocable Living Trusts: Spendthrift Trusts: Offshore Trust: Domestic Asset Protection Trust:

    Choosing a Trustee:

    A trustee is in essence the trust's manager. Every trust is required to have one. It is within your power to appoint and remove the trustee as you see fit. Historically, only a public trust company was available, but recently select jurisdictions have begun allowing Private Trust Companies ("PTC"):

    Public Trust Company: These are professional institutions specializing in asset protection, wealth management and related areas. They fulfill all required duties and charge approximately 1% of Assets Under Management (AUM). These are also called independent or 3rd party trustees. Private Trust Company: A company specially formed for your family alone. They can manage one or many family trusts. They provide more direct control, while lowering costs and enhancing privacy. Blended Approach: We generally recommend a PTC during your lifetime. This provides direct control of your assets while minimizing cost. If you are afraid of your children infighting, or financial recklessness, then when you a pass a public trust company can begin administering the trust. This prevents fighting and poor decision making.

    Revocable vs. Irrevocable Trusts

    A revocable trust does not offer asset protection. It can provide privacy, be used to avoid probate, and assist with larger estate planning goals. Though, it can be revoked at anytime with the assets in it used to pay off creditors if a judge so demands. For this reason only irrevocable trusts provide asset protection.

    Hearing irrevocable can cause concern because of its seeming permanence.

    Why Us:

    We are passionate about what we do. Our family history includes a company which survived two world wars, the depression and a near fatal accident. None of these things kept us down. What did finally do the company in was an untimely divorce and estate taxes.  We don't want this to happen to you.

    What Now? Stay One Step-Ahead and Order Today:

    We offer a number of packages...

    Asset protection describes a wide sphere of legal techniques and structures. These stuctures are generally constructed to provide legal protections against lawsuits, creditors, divorces, bankruptcy and taxes.

    Domestic Asset Protection Trusts can be employed for individuals and corporations seeking protection from aggressive creditors, or as part of a comprehensive estate planning process. Asset protection, also known as debtor-creditor law, is a type of legal planning to protect against civil judgements.

    A commonly and easily used DAPT strategy is the “exempt asset strategy”, which, as the name implies, involves assets which are considered exempt from claims due to state law. Such assets may include primary residences, retirement plans, annuities, life insurance and some business assets.  Another simple DAPT strategy is to transfer assets to a 3rd party. Putting assets into trust for a loved one can help shield the transferred assets from liabilities. There are two common downsides to these strategies. They are the transferor loses control and economic benefit of the assets transferred and the assets are not protected from claims which are made against both transferor and transferee.

    Statutes determining creditor rights vary state-to-sate. Wyoming's legislature has enshrined a number of debtor friendly laws which make it one of the best states in the union for protecting assets. Only a handful of states have enacted legislation allowing for their use, some examples are Wyoming, Alaska, Deleware and Nevada. One should prefer an experienced attorney for matters concerning asset protection due to state-to-state differences

    Businesses and individuals who are being unfairly pursued by creditors can benefit from these legal techniques. Fortunately, living in a state other than one of these in no way disqualifies an individual from enjoying the benefits of such an arrangement. As a member of the Wyoming Domestic Asset Protection Counsel we are familiar with assisting individual's and business' with setting up these structures and are happy to discuss them individually or as part of a comprehensive estate plan. Follow the link above for further information.

    Individuals and corporations are increasingly seeking strategies to protect and preserve their wealth. This movement towards asset protection has been in part fueled by the realization certain litigations and hazards present to accumulated wealth. Examples of such hazards are worldwide economic problems, failed marriages and blended families. These all constitute exposure to undue financial risks.

    Many will find they don’t need asset-protection planning, but there are groups with greater exposure and risk. Such groups are doctors, attorneys, accountants, directors and officers of public companies and real estate owners. Add to those groups anyone with significant means and there is a meaningful population that is or at the very least should be concerned with asset protection and risk management.