What is an Asset Protection Trust?
An Asset Protection Trust (also known as an APT) is a legal mechanism used to protect assets from creditors in the event of a lawsuit or bankruptcy. In Washington State, an APT can be used in order to protect an individual’s assets from being taken away in the event of litigation or financial hardship. An APT is a trust that is created by an individual for the purpose of protecting their assets from claims by creditors. The trust is managed by a trustee, who is responsible for investing the assets and making distributions from the trust in accordance with the terms of the trust. The trust itself is separate from the individual’s legal identity, so any assets within the trust cannot be taken away by a court order or creditor’s demands. In addition to asset protection, an APT can also be used to minimize estate, inheritance, and gift taxes, as well as provide for the ongoing care of beneficiaries. As a result, an APT is a popular tool for estate planning as well as providing legal protection against creditors. In Washington State, Asset Protection Trusts are governed by the State’s Uniform Trust Code, which provides guidance on the requirements for creating and administering the trust. It is important to note that Asset Protection Trusts are not foolproof, as there are limits to how and when creditors can seize assets from a trust. For this reason, it is important to speak to an attorney with experience in trusts in order to ensure that all legal requirements are met.
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