Florida Asset Protection: What is an IPUG™ Trust? How does an IPUG™ Trust work?

Asset protection was previously out of reach for most Americans.  Thanks to a new trust called the IPUG™ Trust, Asset Protection is affordable for the average family.  In the past many families created trusts to avoid estate tax, but with the recent increases in the Federal estate tax exemptions, many use trusts to manage assets, avoid probate, and protect assets from creditors.

The iPug™ Trust not only provides advantageous tax benefits, but it also provides asset protection, while retaining Grantor control,” explains David J. Zumpano, CPA, ESQ., President and Founder of MPS and creator of the iPug™ Trust. “iPug™ Planning will  apply to 99.5% of Americans.”

A big deterrent of many trusts is that they are dependent on state law which differs from state to state.  This makes planning complicated and things that work in one state will not work in another.  However, the iPUG™ Trust is not reliant or dependent upon state or federal-specific asset protection laws.  So unlike many protection planning techniques, it can work in any state for anyone.

Another drawback to many kinds of trust that can provide asset protection is that once you place your asset into the trust, you can no longer control it.  Most people are not comfortable losing control of their assets, even to gain protection.  The iPug™ Trust is unique in that it allows you to be the Trustee of your trust, which means you maintain control over the assets inside the trust.  You get the best of both worlds — you maintain control and receive protection.

There are three main types of IPUGs. They are the Control Only, Income Only and Third party.  The Control only provides the best protection in many circumstances.  While an iPug™ is created and managed by the settlor or grantor, they do not have the risks that  “self-settled trusts” have.

The control-only lets the grantor maintain full control over the trust assets as well as the trust income. The grantor can distribute the assets to whomever he or she wishes (except themselves), and the assets are also protected from creditors.   In some cases, spouses can be the beneficiary of the other spouses’ IPUG™.

With the income-only IPUG, the grantor surrenders the right to the assets in the trust, which are only available to beneficiaries. However, the grantor can access the income from the trust. The income can also be vulnerable to creditors; however, the beneficiary-controlled assets are protected.

A third-party IPUG is where the grantor establishes a trust for the benefit of a third party. This is most popular among adult children who wish to establish a trust for minors or parents, and generally occurs when the parents have already transferred assets to children but still want access to the assets. The trust assets are protected against creditors of the adult children as well as divorce.

With the recent uncertainty about inherited retirement accounts, the IPUG™ is also being used to protect retirement funds from risk of loss due to the beneficiary’s status.  There are many benefits to adding an IPUG™ to your estate plan and you should talk with an estate planning lawyer about your situation and how you may add asset protection to your estate plan.

Contact Information