-- In a recent interview, leading asset protection attorney Paul Deloughery, founder at Magellan Law, PLC in Scottsdale, AZ, revealed potential problems with domestic asset protection trusts.
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When asked to comment, Deloughery said, “Many people who are looking to set up a trust to provide legal protection for their assets assume that domestic trusts are the best way to go. They could be for some, but there are a couple of possible downfalls."
One potential disadvantage of domestic asset protection trusts is that they aren’t legally recognized in every state.
“Because these types of trusts don’t exist in every state, anyone who sets one up might run into problems when parties involved in the trust are in different states.”
When asked to elaborate, Deloughery said, "In other words, if someone wants to challenge the contents or terms of a domestic asset protection trust, then courts in specific states might not see it as valid. This would put your assets at risk, rendering the trust void."
Even when domestic asset protection trusts are available in individual states, they are still not protected under federal law.
When asked to explain, Deloughery said, “Federal law takes precedence over state law. If a case regarding a domestic asset protection trust makes it to a federal US court, such as a bankruptcy court, then the assets in the trust could become vulnerable.”
Domestic asset protection trusts are not entirely foolproof in protecting assets, particularly when it comes to creditors.
“Under certain circumstances, lenders can gain access to assets placed in these trusts. This can happen if a court rules that a ‘fraudulent conveyance’ occurred. A fraudulent conveyance is when assets are intentionally transferred into a trust to avoid paying a creditor.”
In this case, Deloughery said, “creditors are then allowed access to the trust’s money in order to pay outstanding balances or debt. This is the worst-case scenario and defeats the whole purpose of setting up a domestic asset protection trust in the first place.”
“That said, when certain conditions are met, domestic asset protection trusts can often be a robust way of protecting your hard-earned assets from creditors. If you’re thinking about establishing one of these trusts, speak with an experienced asset protection attorney to learn if it’s right for you,” he added.
Source: http://RecommendedExperts.biz
Contact Info:
Name: Paul Deloughery
Email: Send Email
Organization: Magellan Law, PLC
Address: 10617 N. Hayden Rd., Ste. B-100, Scottsdale, AZ 85260,
Phone: 602-443-4888
Website: https://magellanlawfirm.com
Source URL: http://RecommendedExperts.biz
Release ID: 507624
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