Ohio Asset Protection Lawyer Reveals Top 5 Mistakes in Using Trusts for Asset Protection

In Ohio, asset protection lawyers frequently use revocable and irrevocable trusts as part of an asset protection plan. But the trusts must be structured correctly and used correctly to offer any asset protection to the Trustmaker, who is often also a trust beneficiary. Unfortunately, most people don’t fully understand trusts and how they work. As a result, they commonly make mistakes that render their trusts powerless to protect their assets. Sometimes these mistakes are made by the Trustmaker. Either they fail to follow through on necessary tasks or they instruct their attorney to create the wrong sort of trust. However, sometimes these mistakes are made by an inexperienced or unskilled Ohio asset protection lawyer. Here are the top five mistakes I see most frequently so you’ll know to avoid them when using revocable and irrevocable trusts as part of your asset protection plan.

Your Ohio asset protection lawyer Should Help You Avoid These 5 Mistakes:

Mistake #1: Assuming a revocable trust will protect assets A living trust or revocable trust by itself offers no protection against taxes, creditors, lawsuits, divorces or any other sort of threat during the lifetime of the Trustmaker. If the Trustmaker dies, all the assets may be fully protected for any surviving trust beneficiary, but this protection does not take effect until the death of the Trustmaker because the Trustmaker can change the trust’s terms or dissolve it altogether while still alive. In order to be protected during the beneficiary’s lifetime, the assets must be in a wholly discretionary legacy trust. See Mistake #4 for a better strategy involving living trusts. Mistake #2: Failing to fund the asset protection trust A trust can’t protect assets that haven’t been transferred to it. Simply forming a trust provides no protection whatsoever. Once the trust has been formed, you and your attorney must then transfer the title or ownership of your assets to the trust. Your real estate and vehicles aren’t “in” your trust until the titles are in the name of the trust. The same goes for bank accounts, investment accounts and all other assets. At my Ohio asset protection lawyer’s office, we always take care of this for the client, but not all attorneys do. Mistake #3: Failing to include a legacy trust in your revocable or irrevocable trust A wholly discretionary legacy trust provides many crucial tax savings that are unavailable if assets are distributed outright. When properly structured, a legacy trust can avoid estate and gift taxes for several generations, ensuring that your heirs receive more of your estate. Mistake #4: Neglecting to first put assets in a LLC Putting the assets in a LLC and putting the LLC inside the trust is the only way to provide protection against personal creditors and lawsuits during the Trustmaker’s lifetime if using a self-settled Ohio trust. Using LLCs inside of Ohio irrevocable trusts or living trusts also gives you control over the assets. Your Ohio asset protection lawyer can help you form an LLC for this purpose. Mistake #5: Assuming Ohio-formed self-settled irrevocable trusts protect assets from creditors Currently, Ohio trust laws do not provide protection from creditors and lawsuits for assets placed in self-settled irrevocable trusts. However, they do enable the Trustmaker to qualify for Medicaid if drafted properly. They also defeat Medicaid estate recovery claims. There is some pending legislation in Ohio that may provide asset protection for Ohio-formed self-settled trusts in the future, but it has not been enacted yet. Some states do provide asset protection for self-settled trusts. If you need the security of a domestic self-settled asset protection trust, your Ohio asset protection lawyer can help you form one in a state that permits them. In Ohio, Gudorf Law Group, LLC, can help make sure your trusts are structured properly to provide secure asset protection. Call our Ohio asset protection lawyer’s office at 1-877-483-6730 to schedule a free consultation.