Asset-protection trusts are the way many insulate their wealth from claims.
Creating wealth is one thing, but protecting it is another matter. Whether your objective is to protect the wealth for yourself and your family right now or to preserve the wealth through multiple generations, a trust can be an especially powerful tool.
Recently, Bloomberg took up this discussion in an article titled “Wealthy Americans Turn to Trusts to Shield Assets.” According to the article, a properly structured trust is one of the most popular asset protection tools, especially amongst the wealthy and those in the thick of business transactions. Consider this: when it comes to litigation, you don’t want to be the lowest hanging fruit (i.e., both the deepest pocket and the easiest pickings) for a plaintiff’s attorney. Remember, lumberjacks choose the tallest trees, fishermen choose the largest fish, and plaintiffs choose the fattest wallets.
Although there is insurance to fill this risk, the right trust (or trusts) should be considered as part of your financial self-defense strategy. To read more about asset protection through trusts, I recommend the original article. As a side bonus, a properly drafted trust also can transfer – and preserve – wealth for multiple generations.
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Reference: Bloomberg (May 22, 2012) “Wealthy Americans Turn to Trusts to Shield Assets”