asset protection trust

An asset protection trust is a self-settled spendthrift trust . This means it is a trust that an individual creates for themselves that is protected from creditors . Asset protection trusts are normally found outside of the United States. There are some basic features of an offshore asset protection trust:

First, there is the use of a trust protector , which is an office that overlooks the trustee .
Second, there is an event of distress clause, which provides that the trustee must disregard any instruction from the trust protector or the settlor in the event of distress.
- An event of distress is generally some judicial order to repatriate the trust assets to the United States because a creditor has gotten a judgment against the beneficiary and is trying to exercise that judgment against the property .
Third, there is a flight clause that authorizes the trustee to repatriate the trust assets from one jurisdiction to another in the event that there is a significant possibility a creditor can reach the trust property.

[Last reviewed in June of 2022 by the Wex Definitions Team ]

Keywords

trusts and estates

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