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

• Author: Jeffrey Robert Matsen
• Profession: Founder and managing partner of Matsen Voorhees Mintz LLP
• Pages: 49-55

49

CHAPTER

9

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

structure.

•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.