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.
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:
Under the Virginia code you may transfer some assets to the trust but must retain sufficient assets to meet current financial obligations.
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.
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.
You may not revoke the trust but there are provisions that allow some limited modifications.
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.
To learn more about estate planning and how this trust could benefit you, please contact Cook, Craig, & Francuzenko.
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