What is an Asset Protection Trust?
An Asset Protection Trust (APT) is a legal arrangement used in California to protect one’s assets from creditors or lawsuits. APTs are set up by transferring assets such as stocks, bonds, real estate, or other assets into a trust. The assets in the trust are protected from creditors and can’t be taken away from the trust holder, even if the trust holder is sued or files for bankruptcy. APTs can be used to protect inheritance, too. When someone passes away, their assets go into their estate. In California, assets in an estate are subject to inheritance taxes, probate costs, and creditors’ claims. Establishing an APT can protect assets in an estate from creditors and reduce the costs of probate. APTs can also be used to protect assets from other risks, such as long-term care expenses or division of assets upon divorce. APTs can also be used to ensure that assets are transferred to a person’s heirs in a timely manner, without them having to go to probate. Overall, an APT can be an important tool to protect one’s assets and ensure they are passed down to their heirs in the way the trust holder wishes. It is important to speak with an experienced lawyer when setting up an APT to ensure that it is done correctly.
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