What is the difference between an asset protection trust and an irrevocable trust?

Asset protection trusts and irrevocable trusts are both types of trust that can be established in Maryland. Generally speaking, a trust is an agreement between a trustor (the person creating the trust) and a trustee (the person who handles the trust) that allows the trustor to transfer assets into the trust for the benefit of a third party (the beneficiary). The primary difference between an asset protection trust and an irrevocable trust is that an asset protection trust is designed to protect the trustor’s assets from creditors, while an irrevocable trust is designed just to protect the assets from taxation. Asset protection trusts are usually set up so that the trustor retains control of the trust assets, while an irrevocable trust usually removes the trustor’s control over the assets. Asset protection trusts can provide superior asset protection benefits because they are usually structured to be beyond the reach of creditors. In addition, they may also allow the trustor to benefit from the assets, depending on how the trust is drafted. On the other hand, an irrevocable trust is generally designed just to minimize taxes, and does not necessarily provide the same level of asset protection as an asset protection trust. In general, an asset protection trust is a better choice for someone wanting to protect their assets from creditors, while an irrevocable trust is better for someone wanting to minimize taxes. It is important to seek legal advice from an experienced attorney in Maryland, though, before deciding which type of trust is right for your needs.

Related FAQs

What is the difference between an offshore trust and a domestic trust?
What is the role of a trust protector?
How does a charging order work?
What is the best asset protection trust?
What is a charging order?
Are there any asset protection strategies that can protect my assets from creditors?
How can I protect my assets from creditors?
What is a self-settled trust?
What are the costs associated with establishing an offshore trust?
What are the advantages and disadvantages of offshore asset protection?

What is the difference between an asset protection trust and an irrevocable trust?

Related FAQs

Related Blog Posts