What are self-settled trusts?

Self-settled trusts are a type of asset protection tool used to protect assets from creditors. Self-settled trusts are also known as "spendthrift trusts" or "asset protection trusts." They are often used in New York to protect assets that may be subject to creditor claims. Self-settled trusts are created by the owner of the assets. The trusts can be governed by the laws of New York or another state, depending on the terms of the trust. The owner of the assets, or settlor, creates terms of the trust, appoints a trustee, and transfers the assets to the trust. The trustee becomes the legal owner of the assets, but the settlor typically has the right to direct how the assets are used, including what types of assets can be used for certain purposes. The trust also establishes an income stream for the settlor and beneficiaries, and sets out how these assets can be used. Assets held in a self-settled trust are protected from creditors as they cannot be accessed without the express permission of the trustee. This protection also applies to creditors who may have a court order against the settlor. Self-settled trusts are complex, and should be created with the assistance of experienced asset protection and estate planning professionals. The New York court system will review the trust documents to ensure that it is consistent with New York’s asset protection laws.

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What are self-settled trusts?

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