Do you want to protect your assets from certain future creditors? In doing so, are you willing to give up control over those assets? If you answer yes, you may want to consider a Virginia Self-Settled Spendthrift Trust.
What is a Self-Settled Spendthrift Trust in Virginia?
This is an irrevocable trust where you create and fund a trust that protects assets from general creditors and is administered by a Qualified Independent Trustee who may apply the income and principal of the trust to you or your needs, as well as other beneficiaries such as your spouse, children, or grandchildren. If you decide you want to look into such a trust, keep in mind:
The transfer of assets to the trust may not render you insolvent.
Under the Virginia code you may transfer some assets to the trust but must retain sufficient assets to meet current financial obligations.
The trust must always have an Independent Qualified Trustee.
The Asset Protection Trust must be administered by a trustee that is not you, your spouse, parent, sibling, descendant, employee, or a business entity controlled by you. That trustee must be a resident of Virginia, or an entity licensed and domiciled in Virginia that performs trustee functions.
If any creditors are in existence when you fund the Trust, they have five years to file a lawsuit.
Importantly, the Virginia Asset Protection Trust MUST be created and funded before any applicable liabilities arise or MAY arise (e.g., an on-going litigation matter). Creditors who had claims at the time of the transfer may sue to collect against the trust’s assets if they do so within five years of the transfer.
The Virginia Asset Protection Trust must be irrevocable.
You may not revoke the trust but there are provisions that allow some limited modifications.
Important Notes on Virginia Asset Protection Trusts
You are not allowed to disapprove distributions and the trust must always have at least one beneficiary in addition to you as Settlor.
Virginia Asset Protection Trusts do NOT provide protection against tax or child support obligations.
Virginia Asset Protection Trust Lawyer in Fairfax VA
To learn more about estate planning and how this trust could benefit you, please contact Cook, Craig, & Francuzenko.
