In order for a Trust to effectively provide asset protection against potential creditors or claimants, it should contain the following key elements:
- The Trust is Irrevocable (and not Revocable)
- Contains a Spendthrift Clause
- Discretionary Distributions (vs. mandatory and/or period payments)
- Third Party Beneficiaries (i.e. not self-settled for own benefit)
If the settlor wishes to reserve additioanl oversight and reservation of rights, an impartial Trust Protector or Advisor can be appointed.
Another variation of an Asset Protection Trust is a foreign Trust with friendly and flexible laws for the Trust and Trustee, while possing legal obstacles for the Creditor.
