Ownership by a Trust

The most popular alternative for asset protection and for owning FLP interests is to transfer the ownership into a trust which is designed for this purpose.Recent developments in trust law and advances in strategy now allow unlimited variations in form, to accomplish most reasonable asset protection goals.  

• Partnership interests held by the trust are immune from charging order or foreclosure.  
• Trusts can be designed to be domestic or foreign, or to convert upon the occurrence of specified events.
• Depending upon the structure of the trust, H and W, as creators of the trust, may retain high levels of power and enjoyment over trust assets without compromising the effectiveness of the asset protection plan.  
• The trust may be tax neutral, preserving existing tax status, or may create estate tax savings and income tax advantages when appropriate.
• The trust can be used for asset protection for the family residence and other property without disturbing the current tax benefits; and 
• A high level of privacy can be accomplished together with these asset protection features. 

Conclusion
Based upon what is intended to be accomplished and the type of assets involved, creating an asset protection plan sometimes involves forming one or more Family Limited Partnerships, Limited Liability Companies or other entities. The key question in these cases is how to hold the interest in these entities. We discussed the fact that owning the interests in your name allows a creditor to obtain a charging order or to foreclose and seize those interests. Generally, we have found that a trust designed to own these entities provides excellent flexibility and convenience and achieves all or most of the goals of a solid asset protection plan.