Planning
There are a large number of strategies available to restructure your company or family finances with the goal of protecting assets and limiting liabilities. Our team of CPAs and attorneys will work with you to determine the best strategy for your circumstances.
Living Trust vs Private Contract Trust
What is the difference between a Living Trust and a Private Contract Trust?
The Living Trust was created by legislative laws (statute laws). It is designed only to eliminate probate and reduce estate taxes. It is an inter vivos (between the living) Trust. And, it is revocable. That means that it is pierceable! The PRIVATE CONTRACT TRUST is not a Trust, but a Contract, and it is irrevocable.
Does a Living Trust protect my assets?
No, it offers NO protection for your assets or your privacy while you are alive. If someone filed a frivolous lawsuit against you he could serve you with a subpoena to produce your Living Trust at a deposition, thereby exposing all your wealth. His next step would be to get a judgment attaching all assets in your Living Trust. Also, if one of your children were to file bankruptcy, the bankruptcy court could attach the child's interest in your Living Trust.
What are some of the differences between a Private Contract Trust and a Living Trust?
The PRIVATE CONTRACT TRUST is irrevocable. A Living Trust is revocable. Because it is
revocable, there are no savings in inheritance taxes with a Living Trust.
Living Trusts do not protect against lawsuits or government asset seizures; the PRIVATE
CONTRACT TRUST does.
Living Trusts are governed by statute law; the PRIVATE CONTRACT TRUST is protected under the
Constitution of the United States.
Most Living Trusts do not qualify as contracts for the following reasons:
1. They normally do not involve two different parties. One party is normally the Grantor and the
Trustee so, there is no "contract" between two different parties in the sense of the
Constitutional meaning. (The government generally recognizes husband and wife as one entity.)
2. A Living Trust is a "Trust agreement," but not a "contract."