A good estate planning attorney will counsel you about your individual circumstances, your family situation, your objectives, your values, and what you want to accomplish through your planning. Your attorney will then explain your options and let you choose how to proceed.
Most of the estate planning options available and utilized result in people retaining total control over their property and all other decisions related to themselves and their family. This is true whether a person chooses a will-based plan, a trust-based plan, or a combination of the two. Certain asset-protection irrevocable trusts by their very nature require a person to give up some portion of his or her property rights in exchange for the asset protection (i.e., protection against creditors). These planning vehicles are, however, not the common planning option, and again, a person would have to choose such a plan of action after having received competent legal counsel regarding the pros and cons of the approach.
By far the most common estate planning choice among our clients is to use a revocable living trust as the main planning vehicle. As its name implies, this type of trust is totally changeable and flexible. If you decide to create a revocable living trust and put your home, bank accounts, and other assets in it today, you can change your mind about it tomorrow or ten years from now and pull those assets out. The assets receive the protections and benefits of the trust when they are in the trust, but you have the legal right and ability to move your property in and out of your trust whenever and as many times as you desire.
In some ways, a revocable living trust is like a safe. You can choose what to put into that safe, when to put it in, and when to take it out. You can also choose to authorize others to access your safe and can even set parameters around when such people can access the property in your safe. The property in your safe remains yours and is subject to your direction and wishes.
Certain trusts known as irrevocable trusts work differently than revocable living trusts. Irrevocable trusts are used to accomplish different objectives—namely, asset protection. Much of the “noise” and information circulated about asset protection trusts is misinformation; beware of the “snake oil” salesman, often not even attorneys, who spend a great deal of time, energy, and money pushing “bullet proof” asset protection trusts. They claim you can have your cake and eat it too; they claim it’s possible to put some or all of your property into one of these asset protection vehicles and thereby keep it safe from all creditors while at the same time retaining total control of the assets. This sounds too good to be true. That’s because it is.
As a general rule, if you have total, unrestricted access to your property, so do your creditors. Again, there are legal and valid ways to create asset protection trusts, but these proper methods require people to give up at least some control over the assets they’re looking to protect in exchange for such protection.
To summarize, estate planning in general does not require a person to give up control over his or her property. Your attorney should counsel with you, learn your situation, and then give you appropriate options from which you can choose. The vast majority of individuals choose a will plan or a revocable living trust plan, neither of which require the maker of such plan to give up any control over assets. While irrevocable trusts do require the makers of the trust to give up some portion of their rights in the property that goes into an irrevocable trust, they receive full disclosure prior to putting anything in the trust and make informed decisions to do so in exchange for asset protection.
“As of May 14, 2013, Utah has a new self-settled asset protection trust statute. Under Utah’s new law, a person can create and fund an irrevocable trust with his or her own assets. As long as the requirements of the statute are satisfied, the person’s future creditors will not be able to attach the trust property, will not be able to force distributions from the trust to the trust’s creator, and will not be able to require the trustees to pay directly to the creditor distributions that would otherwise be made to the trust’s creator. The creditor must wait until the trust distribution is actually received by the trust’s creator. To qualify under the new law, the trust must have at least one trustee who is a Utah resident or a Utah trust company. The creator of the trust may serve as a co-trustee, but he or she may not be permitted to participate in distribution decisions. Distributions from the trust would be made in the discretion of the other co-trustee. The trust does not protect any property that was transferred to the trust with the intent to defraud an existing creditor. A creditor of the trust’s creator who exists at the time the trust is created must bring an action to enforce his claim within the later of two years after the property is transferred to the trust or one year after the creditor could have reasonably discovered the transfer. However, the creator of the trust may shorten this limitations period to 120 days by sending notice to known creditors and publishing notice in a newspaper of general circulation in the county in which he lives” (from UtahAssetProtection.org).