What is a self-settled trust?
A self-settled trust is a type of trust in which the individual who creates the trust also serves as the beneficiary. This type of trust is available in Hawaii and is used to protect assets from creditors and lawsuit judgments. Self-settled trusts are also known as “asset protection trusts,” and they help people protect their personal property and possessions. The trust is created by the individual who is called the settlor. The settlor transfers assets to the trust, and the assets are managed by a trustee. The trustee is the person appointed by the settlor who manages the trust according to the instructions spelled out in the trust document. The settlor can also act as the trustee, and the trust can be set up so that the settlor is entitled to the trust’s income and the trustee has the discretion to make distributions to the settlor. When the trust is established, the settlor cannot personally access the assets. The settlor, however, can direct the trustee to distribute the assets to the settlor. This means that the assets in the trust are beyond the reach of creditors and judgments, unless the trustee violates the terms of the trust. In Hawaii, the self-settled trust must be irrevocable, which means that the settlor cannot change the terms of the trust once it is established. In addition, the trust must also be “spendthrift” which means that the beneficiaries cannot pledge the trust’s assets as collateral for a loan or transfer any of the trust’s assets to another person. Self-settled trusts are a great way for individuals in Hawaii to protect their valuable assets and possessions. This type of trust ensures that the assets are safe from creditors and lawsuit judgments and can be a valuable tool in estate planning.
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