Ohio recently passed legislation which allows for the creation of a Legacy Trust. A Legacy Trust is used for creditor protection of your assets, during life, in an irrevocable trust.
If you create this type of creditor protection trust, you are limited to distributions of annual income and 5% of the principal each year. The Trust assets can be used to pay the income tax for the trust assets as well as to pay debts, expenses, or taxes of your Estate.
This creditor protection trust does have some exclusions. These exclusions include transfers to the trust with intent to defraud a specific creditor, child support, alimony (if the transfer was after marriage), and claims that occur within 18 months after a valid transfer.
For a Legacy Trust to be valid it must have a trustee who is not the settlor of the trust. The trustee also be located in the State of Ohio. The Settlor of the trust can retain a power to remove the Trustee and to veto a transaction.
Contact Elliott Stapleton to schedule a consultation to discuss creditor protection and trust planning.