A trust is a means of transferring property—whether it is tangible or intangible— or funds from one party to another. It is a legal tool that allows transition of ownership through a third party, who manages the estate until such time that the original owner wishes to pass on the property to another in accordance with the terms stipulated by the former. Many types of trusts exist to serve different purposes. A trust that is created to protect the estate placed within a trust in the interests of the trust’s beneficiaries is referred to as an asset trust.
Also known as an asset protection trust, an asset trust works like any other trust would. The purpose of creating this type of trust is to protect the assets—whatever money, property, or tangible and intangible goods placed under the terms and conditions of the trust—from any type of detrimental situation or event. Such situations may arise when a trust is part of a lawsuit, lien, divorce settlements, and others.
Grantors create asset trusts in jurisdictions where such trusts are recognized. A grantor creates this type of trust in order to be assured that whatever assets were placed under the terms and conditions of the trust are not susceptible to any other person other than the beneficiaries. Because an asset trust is meant to protect the assets, the beneficiaries themselves are not subject to any limitations other than those stipulated in the trust. This means that the nature of the asset trust as protecting assets does not preclude the beneficiaries from receiving what they were meant to receive.