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Asset protection / Trusts
Old 04-18-2007, 09:37 AM   #1
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Asset protection / Trusts

Every once in awhile, you hear a story about how one of the Kennedy's got drunk, drove home, and smashed up something or other in the process.

Apparantly the Kennedy's have assets locked up in trust, so they can get away with this sort of thing without getting sued and having a judgement take away all their money.

Is this real, or an urban legend? I've seen lawyers trying to sell asset protection trusts for $3k to $5k.

Most normal people, when assets reach a certain threshold, have umbrella insurance for liability protection. Is a trust another/better option? Any recommendations on where to learn more?



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Re: Asset protection / Trusts
Old 04-19-2007, 11:20 AM   #2
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Re: Asset protection / Trusts

I do not know if a trust could be a form of asset protection in such an event. I am guessing it might matter if it was revocable vs irrevocable. (I was hoping someone else would answer this question.)

However, even if a trust does offer some protection it seems an umbrella policy would be a good idea. I like the idea of a ready legal firm on my side (via the insurance megga corp ) should a the issue rear it's ugly head.

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Re: Asset protection / Trusts
Old 04-19-2007, 11:45 AM   #3
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Re: Asset protection / Trusts

Yes a trust can protect you at times... don't know if that is what protects all the Kennedy money..

But, insurance can protect you also..
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Re: Asset protection / Trusts
Old 04-19-2007, 11:59 AM   #4
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Re: Asset protection / Trusts

Generally speaking properly formed spendthrift trusts will not be able to be attached by creditors of the beneficiaries. Historically, the trust could not be "self settled," that is, formed by you with yourself as a beneficiary. But grandpa could form a spendthrift trust with proceeds going to his children and grandchildren. A creditor of the beneficiaries would not be able to reach the trust assets. A creditor of grandpa may or may not be able to seize trust assets, depending on grandpa's degree of control (revocable vs. irrevocable), grandpa's intent in forming the trust (was it to evade creditors?) and how long ago the trust was formed (transfers without reasonable equivalent value can be undone within a certain time period, generally six years).

In the past few years there has been a development in some states of allowing asset protection trusts that you could form with yourself as a beneficiary and under those state's laws, could not be attached by your creditors. These laws are fairly new and I question whether an asset protection trust would protect you from creditor claims in a bankruptcy. The bankruptcy code does not currently address these kinds of trust and when the most recent amendments to the code were passed they did not modify the code to address these types of trusts.

I talked more about these types of trusts here:

No more lawyer stuff, no more political stuff, so no more CYA

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