Asset Protection Planning
An asset protection trust is an irrevocable trust designed specifically to place assets beyond the reach of future creditors and lawsuits. The concept is simple; the timing requirement is absolute. Courts can and do unwind transfers made after a creditor claim already exists or was reasonably foreseeable, treating them as fraudulent transfers made to defeat a legitimate claim. Real protection only exists for assets transferred well before any dispute is on the horizon.
The mechanism is the same one that underlies every irrevocable trust: because you give up legal ownership and control of the asset, it’s no longer yours for a creditor to reach. The trustee — someone other than you — manages the assets according to terms you set at the outset, for the benefit of beneficiaries you name, which may or may not include yourself depending on the specific structure used.
WHO BENEFITS MOST
facing malpractice exposure that standard insurance may not fully cover
whose personal assets could be reached in a lawsuit against the business, particularly in industries with meaningful liability exposure
exposed to tenant and premises-liability claims
generally, who represent a more attractive litigation target regardless of specific profession
where the relevant structure is specifically a Medicaid Asset Protection Trust rather than a general asset protection trust — see our dedicated page for that distinction
FRAUDULENT TRANSFER RISKS
DOMESTIC & OFFSHORE TRUSTS
TRUST REPLACEMENT
You give up direct legal ownership, but many structures allow continued management authority through carefully drafted trustee and beneficiary provisions — the specific balance depends entirely on how the trust is drafted.
A WORD ON DIY WILLS
EXPLORE MORE
Explore related resources to better understand your estate planning options.
