If you want to protect your assets from creditors, legal judgments, and divorce decrees, you should consider placing them in an asset protection trust.
You can set up a domestic assets protection trust in another state where it is more affordable to protect your assets. For example, if you live in New York, setting up a domestic asset protection trust in Wyoming can save you money. You also have the option to establish a foreign asset protection trust by putting your assets in a trust established in another country. Your assets should be much safer in a country such as the Cayman Islands than they are in any state in the United States.
Regardless of the type of asset protection trust you decide to form, you should know that establishing either type comes with a rather substantial price tag. You save money in the long term by protecting your assets, but the short-run costs of setting up an asset protection cost can be significant.
How Much Does It Cost to Create an Asset Protection Trust?
There is no rule to calculate how much it costs to establish an asset protection trust. Several factors influence the cost of creating a trust to protect your assets, but we can provide you with general numbers to help you financially plan for the future.
The initial setup fee should be at least $12,000 for a domestic asset protection trust and at least $25,000 for a foreign asset protection trust. In addition to the five-figure initial setup fee, you can expect to spend thousands of dollars per year in maintenance fees. The maintenance fees for a foreign asset protection trust are higher than for a domestic asset protection trust.
Some of the maintenance fees you pay go to your estate planning attorney, while most of the maintenance fees compensate the trust company for providing its services.
What Are the Factors That Determine the Cost of an Asset Protection Trust?
Several factors come into play to determine the cost of an asset protection trust. The first and most important factor is where you locate the trust. If you set up an asset protection trust in the Cayman Islands, you can expect to pay much more for it than if you established it in an affordable state such as Delaware, Nevada, or Wyoming. One of the main reasons why a foreign asset protection trust costs more than a domestic asset protection trust concerns the costs of compliance with government regulations
If you want to establish a foreign asset protection trust, you must meet specific requirements that include filing forms 3520 and 3520-A. The higher cost of creating a foreign asset protection trust can provide you with more protection than if you start one domestically.
Maintenance fees paid to your lawyer and the trust company take care of administrative expenses, as well as the cost of completing financial transactions. Maintenance fees tend to be higher for a foreign asset protection trust.
When Should I Set Up an Asset Protection Trust?
Once again, no clear-cut rule helps you decide when to create an asset protection trust. Accumulating at least $1 million in assets is an excellent place to start. You want the costs associated with establishing an asset protection trust to be worth it, and that means starting with a considerable amount of assets in the trust. Waiting until you accumulate $5 million in assets is a good benchmark for when to open a foreign asset protection trust.
Work with an Estate Planning Attorney
Hiring an estate planning lawyer can answer the questions you have about the cost of starting an asset protection trust. Schedule a free consultation with the estate planning attorneys at Cloud Peak Law Group to learn more about protecting your assets from creditors, legal judgments, and divorce decrees.