The Florida Asset Protection Trust.
Most financial planners are unfamiliar with some of the modern twists available with Florida Asset Protection Trusts. This is a special type of irrevocable trusts. They tend to be familiar with the older style of irrevocable trust that can pose several problems for those who use them. These problems include:
- Loss of control over the management of the assets;
- A separate EIN number for tax reporting purposes;
- A larger tax bills because of the way traditional irrevocable trusts are taxed;
- A loss of the step up in basis available to assets owned by an individual upon the death of the settlor; and
- The inability to change provisions or beneficiaries in the future.
- The inability to transfer the ownership of insurance, annuities, life insurance and other securities.
While our Florida Asset Protection Trust is an irrevocable trust, this trust does not have any of the traditional problems that are discussed above nor it is a “self-settled trust” as defined by the IRS. Because the Florida Asset Protection Trust is not self-settled, there is no 10 year lookback on transfers in the case of a bankruptcy. The Florida Asset Protection trust that we use is an Irrevocable Pure Grantor trust (IPUG™). With this special type of Florida Asset Protection trust many of the advantages and flexibilities that are traditionally only found with a revocable trust can be provided while maintaining the strong asset protection that can only be accomplished with an irrevocable trust. Some may ask, why should we use an irrevocable trust instead of a revocable trust. Here is a summary of the reasons that our Florida Asset Protection trust is superior to the traditional revocable trust and does not pose the problems that a traditional irrevocable trust presents: