Asset Protection Trust Structure Diagram – The Best Way Of Structuring A Trust

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Today I’ll show you an asset protection trust structure diagram, which is the best option to go for when setting up a trust.

This diagram is based on a trust in the core of the whole plan, and it’s the most important part of a setup like this. We can see the trust owning a LLC, meaning a Limited Liability Company.

The reason the trust owns a LLC, is because a lot of the time it can be difficult to open a bank account for a trust. Therefore it’s much easier to have a trust own a LLC. This company can then have bank accounts in different countries, own real estate, precious metals, patents, different kinds of intellectual property etc. Anything a person can own, your trust or in this case a LLC owned by the trust can own, which gives you a lot of flexibility.

Asset protection trust structure diagram - Infographic

We also have to take a look at another very important part of this whole diagram, and that is “Who’s actually managing the trust?” And any other positions that are also in place.

In case you didn’t already know, a trust is essentially a document, which outlines specific rules about how assets can be managed. It’s approved with certain government authorities before it can be used, so you can’t exactly make a trust by yourself. It needs to be regulated properly, in order to be recognized.

If we compare a company to a trust, a company consists of a document that explains how the business works, and then the company is registered somewhere with a name etc. But a trust on the other hand is much more complex. You have a lot of different rules, and a trust allows you to legally not own anything, but control everything. In other words, what you don’t own cannot be taken away from you. That is one of the biggest benefits with having a trust, because let’s say someone sues you, there is a divorce, you get into bankruptcy etc. No one can take any assets you have in the trust, which is the essential asset protection fact about this.

Let’s take a look at the trustee. The trustee is the person who’s responsible for managing the trust assets, when it comes to your bank account and anything else the trust owns. We have a couple of elements that we always make sure to include in the trust, so the trustee can’t make any mistakes, and we’ll get back to that.

The next person we have as part of the trust, is the settlor. You don’t really have that kind of position with a company, at least not registered anywhere. The settlor is the founder of the trust, and retains certain powers about how the trust will be managed.

Next person is the protector, and the protector is also very important. You can set up a trust where the protector has to approve anything the trustee does. In some cases this can be our client, but in that case we have to make sure everything is taken care of in the right way. So if you disagree with the trustee, you can say “No, you can’t do that” whatever might happen. When you have a protector in place, you can make sure everything is managed in the way it’s supposed to.

The last part of this plan includes the beneficiary or beneficiaries. A trust doesn’t have owners, it has beneficiaries, which includes whatever person or company you have listed as a beneficiary, that can then benefit from the trust assets. Meaning that only beneficiaries can receive money or other assets from the trust. Anyone else not listed as a beneficiary, can’t receive anything. And because a beneficiary is not an owner, it’s only a person who has the right to benefit from the trust. If someone tries to sue a beneficiary, which might include you, it won’t be possible to take anything from you, because you are not an owner. You only have the right to benefit, but is not the owner of anything. In other words, what you don’t own cannot be taken away from you.

But you can still manage anything in the trust, as well change ownership of assets whenever you want. You have that freedom, but at the same time you don’t legally own anything.

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Fredrik helps high net worth individuals with creating international asset protection strategies. To keep anything from currency, real estate, precious metals and any other kind of investment protected from an unexpected lawsuit.