People have always wanted the ability to protect their money from current or future creditors. It is only natural. Who wants to lose all of their assets? No one.
Short of filing for bankruptcy, which requires that you have no assets, creditor protection has been difficult to achieve. One solution is to create an asset protection trust.
Asset protection trusts are controversial, especially if you are a creditor.
However, Michigan recently became the 17th state to allow them, according to Forbes in "Michigan Debuts The Latest State Asset Protection Trust."
What asset protection trusts do is to allow someone to transfer their assets into a trust that is controlled by an independent trustee. That trustee can then refuse to pay any creditors with trust assets.
To make this a little more fair for “current” creditors, suits against trust assets are allowed within a statute of limitations. These trusts are controversial enough when talking about institutional creditors, but they become even more controversial when they are used to shield assets from family law courts, which some states allow. These trusts allow people to protect assets from a spouse in a divorce.
Most states do have an exception for child support, but not all do.
As asset protection trusts become more popular, more states will probably start to allow them. Ohio permits asset protection trusts and Michigan is not likely to be the last state to do so.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Forbes (February 10, 2017) "Michigan Debuts The Latest State Asset Protection Trust."