Individuals in some professions are more likely than others to face an increased risk of lawsuits, including entrepreneurs and corporate board members. But there is a way to help protect your assets from potential future liabilities.
Delaware law permits you to establish a special type of irrevocable trust that, when properly done, may protect your assets from creditors. To establish a Delaware Asset Protection Trust, you transfer selected assets that, once transferred, may be insulated from future creditors.
In simple terms, a trust is a legal entity that you create with your attorney by a written document in which you authorize the trustee to manage the property transferred to the trust for the purposes that you specify within the trust document. While the trustee holds legal title, you or designated beneficiaries, retain beneficial title, and the trustee is legally obligated to operate within the terms of the the trust and applicable law.
As grantor, Delaware law permits a trust to allow the grantor, during his or her lifetime, to direct the investment of the assets; to receive income and principal, and to veto distributions to third parties. As grantor, you can also retain the power to distribute the assets through a limited power of appointment at your death. To protect your assets, you may relinquish some control over the assets, but losing control does not mean losing all of the economic benefits from the property transferred. If you're concerned that your assets might be at risk, PNC Wealth Management(R) can work with your legal counsel to create a customized solution to meet your needs.
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