Lower Insurance Premiums
With A Trust

You have a revocable living trust, which is also called a grantor trust. You want to know what happens to the trust after you die.

The answer is it depends on how the trust is drafted. Wyoming has a strong spendthrift trust statute. For this reason, most Wyoming trusts leave your assets to your beneficiaries in trusts that they may manage themselves and which protect them from failed marriages, unpaid taxes and creditors.

One of our clients owned a string of successful storage facilities. Most of the land and buildings had been paid off after a lifetime of working on the company. This left a lot of equity in operating companies which were in turn owned by him. As a result, his buildings and personal assets were all over-insured. It was an expensive method for segregating risk and keeping assets safe.

The solution was two-fold. The first step was moving the buildings and land into their own companies. This separated the assets from any operational risks, e.g. someone falling inside the facility.

The second step was to transfer ownership of the LLCs into an asset protection trust. This removed title to the buildings and land from his name entirely, while the risky operations continued in their own LLC owned by the client.

Separating the ownership of the assets from personal and business liabilities means there is less at risk. That is, the most valuable assets are no longer tied to your operational company or your personal actions. The result is significantly less insurance is required, and thus significantly lower insurance premiums are paid out.

Doctors often bemoan high malpractice premiums. This upward trend looks likely to continue in our litigious society unfortunately. Fortunately, however, doctors have various means to fight back and protect their assets.

The first step is to move valuable personal and business assets into a trust. Personal assets may include homes, automobiles and securities. Business property and equipment will be transferred and leased back to the operating company.

This method places your most valuable assets into trust and out of the reach of creditors. Moving assets out of your name makes you less of a target to begin with. If a lawsuit is filed, chances are the opposing slip-and-fall attorney will prefer other lower hanging fruit and are unlikely to pursue the matter further.

The end result is lower malpractice coverage is required. You own fewer assets, making you less of a target, and you have fewer assets to insure - thus lowering your required premiums.

Any asset intensive or risky industry can benefit from the strategy described above. Equipment leasing, real estate and doctors are just a few examples.