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Spokane Estate & Probate Lawyers / Blog / Asset Protection / Asset Protection Trusts in Washington State

Asset Protection Trusts in Washington State

asset protection trusts washington state

In an era of financial uncertainties, protecting your hard-earned wealth is paramount. Whether you’re an entrepreneur or a high-net-worth individual, safeguarding your assets from potential creditors, lawsuits, or bankruptcies is a cornerstone of sound financial planning.

This article takes a deep dive into asset protection trusts, comparing the pros and cons of revocable living trusts versus irrevocable trusts and discussing the role of supplemental needs trusts.

Our goal is to equip you with the knowledge to make informed decisions, secure your assets, and ensure your financial legacy is well-guarded. 

Let’s begin our journey into asset protection trusts’ intricate yet vital sphere.

Should You Use a Revocable Living Trust for Asset Protection?

Broadly speaking, when asset protection is the goal, a revocable living trust  may not be appropriate  for this exact purpose

A settlor, or in other words, the person who created the trust, will fundamentally hold primary control and possession of all trust assets, which also means this person may remove an asset from the trust or even change the trust’s conditions whenever they’d like, all the while the trust itself is simply there to hold title to the assets.

If a creditor wins a legal decision vs. the settlor, the court might rule for the payout of the trust’s assets to settle the creditor’s claim.

While a revocable trust will not offer your family asset protection, they have additional estate planning benefits. For instance, a trust can be helpful for circumventing probate fees if the settlor passes away.

How About Using An Irrevocable Asset Protection Trust?

For any matter which concerns correctly protecting your assets, you should choose an irrevocable trust when living in Washington State. As the name suggests, once this type of trust is established, you will not be able to revoke it by changing its terms, nor will you have the authority to control the trust’s assets.

In this case, the trust’s assets are controlled by the trustee, which is the fancy term for the person assigned to manage the trust. Because of this, any modifications or distributions are solely at the trustee’s discretion.

When a creditor files a lawsuit against you, the assets within your trust will most likely not be considered yours. So if the creditor wins a judgment against you, the likelihood will be much more significant that any assets residing in your irrevocable trust will be well protected.

Domestic Asset Protection Trusts (Foreign / Domestic)

Two types of irrevocable trusts will work as an asset protection vehicle: foreign asset protection trusts and domestic asset protection trusts. Domestic asset protection trusts can be formed in the U.S. within any state that offers legislation authorizing the formation of such trusts.

Not every state provides for this type of trust, so it’s imperative that you meet with an estate planning attorney to determine exactly which state near you is best suited for such trusts. Nevertheless, as these trusts have grown in popularity, many states are starting to recognize the legal status of this type of trust.

We should also mention that it will typically be less costly to set up an asset protection trust in the U.S. than creating a foreign asset protection trust.

This is because this type of trust is relatively new, and the case law concerning their status is constantly shifting. This can add a level of uncertainty in terms of their capacity to protect your assets correctly.

Many states mandate a limitation period during which assets transferred into these trusts may remain vulnerable to creditors, so be careful.

Supplemental Needs Trusts in Washington State

A Supplemental Needs Trust can be created for any individual who may require government benefits in the future or those who need assistance with asset protection. A trust protecting your assets can help keep you from getting wiped out by a lawsuit or bankruptcy.

These are also known as ” Asset Protection Trusts .” These trusts can be utilized alongside your Will to help secure your spouse or other family members’ assets against the high costs of Long-Term Care facilities, a state lien, tax liabilities, and credit issues, and even counteract a future unintended disinheritance situation.

If you have loved ones that have special needs or you’d like to safeguard your loved ones against financial problems, you can ensure they will be well cared for when you can’t be there for them. These trusts allow individuals with disabilities who currently receive or expect to receive government benefits to preserve those benefits while also providing additional funds for using the Trust beneficiary.

Benefits of a Special Needs Trust:

  • It may be set up as a Living Trust (intervivos) or a Testamentary Trust (through one’s Will).
  • Allows for the parents of children to contribute extra funds to supplement existing government benefits and other aid.
  • Authorizes those severely injured to receive personal injury settlements or other awards to protect their funds to remain eligible for state or federal benefits.
  • You can protect funds for a surviving spouse who may require Long-Term Care services without interfering with the existing Long-Term Care eligibility requirements for Medicaid.

Asset protection trusts offer the most robust protection from creditors, lawsuits, or any judgments against your estate. An APT can help deter costly litigation before it begins or influence settlement negotiations’ outcomes favorably.

Consequently, it may be wise to consider transferring certain assets like securities and cash accounts, valuable and risky business and other recreational assets, real estate holdings, or settlor businesses into an LLC case-by-case basis.

Benefits Of A Medicaid Asset Protection Trust

These trusts can help your eligibility for Medicaid in some cases by reducing the assets held in your name. If you plan to set up a trust for this purpose, we highly recommend that you consult with our attorneys so you can lean on their countless years of experience in this area when structuring your trust documents.

Asset protection trusts can be a critical estate planning tool. Because such a trust must be set up correctly, consult with an advisor with expertise in asset-protection matters.

If a lawsuit or creditor threatens your hard-earned assets today, consider prudent legal planning to protect yourself tomorrow.

Put in place prudent legal strategies before time runs out so that you’ll have more peace of mind now and in the future.

Statistics and anecdotally, we all know the number of divorces, lawsuits, and bankruptcies is staggering.

For this reason, many individuals are turning to the Asset Protection Trust Services offered by Attorneys at Moulton Law Offices to shield their hard-earned assets from suits or creditors to create a safe environment for themselves, their families, their businesses, and their retirement savings.

Asset protection services are becoming increasingly important as the number of divorces, lawsuits, and bankruptcies continues to rise. Learn more about how asset protection trusts work here.

Both anecdotally and statistically, many people realize that the number of insolvencies, lawsuits, and divorces is astonishing. For these reasons, many local Spokane families have turned to asset protection trust services provided by our Washington State licensed attorneys to protect their hard-earned assets against lawsuits or creditors.

We can help provide a safe financial environment for families and businesses and their retirement savings. Moulton Law Offices specializes in asset-protection services, with legal planning experts representing some of the largest corporations in America and entrepreneurs alike.

Wide Range of Legal Services Available

Our firm offers a full array of asset protection services, including planning and implementation through Asset Protection Trusts, business entities, business purchase protection, business protection planning, LLCs, Personal Protection Planning, Probate Protection Planning, Protective insurance strategies, and Special Needs Trusts.

Make prudent decisions today to protect yourself, your business, and your hard-earned assets from loss due to lawsuits, creditors, or bankruptcies, with Asset Protection Services offered by Moulton Law Offices.

Asset protection planning is about making sensible decisions today to protect yourself, your business, and your hard-earned assets from loss to potential lawsuits, hungry creditors, or bankruptcy. 

This form of legal planning can be particularly beneficial to busy professionals and business owners whose personal assets could be subject to additional risks from the very nature of their employment.

The importance of protecting your assets cannot be overstated. 

See this  helpful resource  from the Washington State Legislature for more information about Trusts in our state.

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