What are self-settled trusts?

Self-settled trusts, also known as asset protection trusts, are legal documents that can be used to protect assets from creditors. These trusts are created by an individual, and the individual can be the beneficiary of the trust. Generally, these trusts are established in jurisdictions that have laws that allow the individual to protect their assets from creditors and other legal claims. In Kentucky, asset protection trusts can be used to protect a variety of assets from creditors, including cash, real estate, investments, and bank accounts. Creditors cannot access the assets placed in the trust, and the trust assets are often exempt from bankruptcy proceedings. Asset protection trusts provide flexibility in that the individual can decide who will manage the trust, the duration of the trust, and the specific assets that are included in the trust. The individual can also control how the trust is distributed when they pass away. In addition to providing asset protection, these trusts can also be used to reduce or even eliminate gift and estate taxes in some cases. An individual can also use a self-settled trust to make gifts to other people, including their children. Self-settled trusts can be a valuable tool for protecting assets and reducing taxes, but they come with certain risks. It is important to work with an experienced attorney to ensure that the trust is set up correctly and that all legal requirements are met.

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What are self-settled trusts?

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