Step Five on the Ladder: Domestic Asset Protection Trusts and Modular Planning Utilizing LLCs

AuthorJeffrey Robert Matsen
ProfessionFounder and managing partner of Matsen Voorhees Mintz LLP
Step Five on the Ladder
Domestic Asset Protection Trusts and Modular Planning
Utilizing LLCs
As discussed in Chapter 6, there are many advantages in creating and utilizing Domestic Trusts.
•Probate is avoided, which eliminates the cost and inconvenience associated with the Probate court
•The transfer of assets is more efficient because it can be accomplished during the lifetime of the
Trust makers (or Trustors) who have more knowledge about their property and assets than their
heirs would have.
•Confidentiality is maintained because no court procedures (namely Probate), which are a matter
of public record, are required.
However, the typical family Living Trust affords no Asset Protection whatsoever for the Trustor. The
Trust can include spendthrift provisions that will protect a third-party beneficiary’s interest in the Trust
from creditor’s claims, but these spendthrift provisions do not protect the Trustor. Nevertheless, they can
be effective for protecting beneficiaries against creditor claims.
For well over a hundred years, individuals in the US and elsewhere have utilized foreign Self-
Settled Trusts to protect their assets. Many offshore jurisdictions have either Trust-enabling legislation
or favorable court decisions that provide creditor protection for Self-Settled Trusts. Because of this
protection, several offshore jurisdictions have a very substantial Trust industry servicing foreign Asset
Protection Trusts.

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