By: Jessica L. Estes, Esq.<\/p>\n
If you read last week\u2019s #TuesdayTips article, you learned how to protect your stuff in three easy steps: 1) know the rules; 2) know your predators; and 3) know your options.\u00a0 Easy, right?\u00a0 But, knowing is only half of the equation.\u00a0 Now, it is time to: A<\/u>ssess your needs; C<\/u>reate what is missing; and T<\/u>ie in your plan.\u00a0 In other words, you must ACT!<\/p>\n
Protecting your stuff starts with an assessment of your needs, which, in turn, requires careful consideration of your goals and values.\u00a0 Typical goals of an estate plan<\/a> include maintaining control and not becoming a burden to loved ones, all the while keeping it as simple as possible.\u00a0 Most people would agree that protecting their stuff from future long-term care costs, is important to them. \u00a0That way, they maintain control of the assets, protecting them after they are gone for the benefit of their loved ones, while at the same time, minimizing the costs of such long-term care and the burden to their family while they are alive.<\/p>\n So how, exactly, does an asset protection trust work? First, there are three parties to a trust \u2013 the grantor, trustee and beneficiary.\u00a0 The \u201cgrantor\u201d is the person who is transferring his or her assets to the trust.\u00a0 The \u201ctrustee\u201d is the person who manages and administers the trust in accordance with the trust provisions.\u00a0 The Trustee is responsible for making all decisions regarding the trust, including any management or investment decisions, as well as deciding whether to make distributions from the trust<\/a>.\u00a0 The \u201cbeneficiary\u201d can be a single person, multiple people or an entity such as a church or charity.\u00a0 There are two types of beneficiaries: \u201clifetime\u201d beneficiaries and \u201cresiduary\u201d beneficiaries.\u00a0 \u201cLifetime\u201d beneficiaries are those individuals named by the grantor who are entitled to receive distributions of income and\/or principal during the grantor\u2019s lifetime.\u00a0 The \u201cresiduary\u201d beneficiaries are those individuals named by the grantor who are entitled to receive distribution of the trust assets after the death of the grantor.<\/p>\n After the trust is established, your assets must be transferred to the trust and the trust will become the owner of the assets.\u00a0 Even though you will no longer own the assets, you maintain control of them because you are the trustee.\u00a0 The plan must, of necessity, though, limit direct access to the principal to ensure that creditors, predators and lawsuits do not obtain access to it.\u00a0 Still, the trust can provide indirect access to the principal during the remainder of your life through your designated lifetime beneficiaries.<\/p>\n