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Your Money and Your Name

By John Dietz - Email Editor

Date: 06-Sep-2005

It seems that once a day I speak with a potential client who thinks they may be getting sued or that trouble is brewing. I realize that in most instances I am only hearing one side of the story. However, my heart always goes out to people when I hear some of the horrific stories of unfair dealings, family homes being sucked away in some sheriff sale, or someone losing their life savings.

One of the questions I always ask is “Is the money and property in your name?” Invariably, the answer is almost always “Yes.” If you have a brokerage account or money in the bank in your own name, get it out now!

The first thing that a potential creditor is going to do is find out if you have anything worth getting. These assets in your name are the equivalent of big game hunting in a zoo. Get your assets titled in a name other than yours. Do not title assets in the names of your parents, children, or siblings, unless you would like to involve them in your troubles. The fact is that each and every one of us needs to form some sort of Trust. Wouldn’t it be nice if we could all be referred to as trust fund babies!

So what Kind of Trust Can You Trust?

Due to the plethora of today’s Trust choices, it may seem close to impossible to decipher what’s right for you. However, the only Trust that I am discussing today is the only kind of Trust that protects your assets, an Irrevocable Trust. The vast majority of our client’s employ an Irrevocable Trust as their Asset Protection tool of choice because it provides protection due to its very nature: It’s irrevocable.

Creating an Impenetrable Trust.

The Irrevocable Trust is the ONLY type of trust that we recommend and put together for private clients. Why? Because it’s the only Trust that truly provides our clients with a very high level of protection from judgment creditors. To ensure the bulletproof effectiveness of the Trust, the transfer of assets into the Trust must be made under circumstances that cannot be considered a fraudulent conveyance.

An Irrevocable Trust is created so that it cannot be revoked or rescinded by the grantor for a definite term. This means that once you establish and fund the Trust, you voluntarily surrender your ability to reclaim your property for a definite period of time. With the transfer of assets to an Irrevocable Trust, you technically give up both control and ownership of the property. Don’t be alarmed, you will be able to get to your money. Most importantly, if done properly, you will not need to trust anyone else either.

An Irrevocable Trust can own any type of property, but it should only hold property that adds value to the trust. The trust should never own liability-generating assets. The trustee’s management decisions must follow wise investor rules and be guided by the investment objectives stated in the Trust.

While the Trust is in effect, you can legally and securely make an outright gift of property to the Trust, or even sell assets from the Trust if it has accumulated adequate assets to pay you. But to be effective as a tool of Asset Protection, the Irrevocable Trust must be correctly structured and maintained.

More on this subject in upcoming articles.

This process of separating you from your assets should not be worrisome or scary. The technology is so powerful that, when constructed properly it can put an impenetrable fortress around your assets. In essence, get busy getting your assets off of your balance sheet and on to your trust balance sheet. Stop being a sitting duck!

One more thing, make sure you have the right people helping you get your house in order. One hint: Your bank can’t do it for you.

Our prayers go out to all hurricane Katrina victims.

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