Assets are crucial for the economic benefit of an individual or a business, and so it is key to ensure that the person’s or business’s assets are protected at all times. When starting a business, an entrepreneur is putting a lot on the line, as legal issues or accidents could lead to creditors claiming assets, creating a plethora of problems. Many small businesses are starting to invest more in asset protection trusts in the United States for this reason.

Behind every asset protection trust is a cost, but these prices seem to be worth it, as it is the strongest form of protection one has when it comes to the valuable asset being claimed. While some trusts could be costly, there are ways to maneuver the market in order to secure the best deal for you and your assets. 

When Is The Best Time To Set Up An Asset Protection Trust 

Seeing as asset protection trusts are important, one should be established the moment it is most suitable for the business and the business members. There is no set-in-stone rule but it is advisable to consider asset protection trusts when there is $1 million worth of assets. An asset protection trust is not cheap, and it is a long-term investment, so establishing one for assets valued at a price lower than that might not be worth the price. 

When it comes to foreign asset protection trusts, a higher asset value should be considered as the foreign trusts are much more expensive, and the reason for this will be discussed later on. Having around $5 million in assets should be sufficient to consider foreign asset protection trusts. Anything lower might not be worth the high expenses that could accumulate. 

The Cost of An Asset Protection Trust 

Determining the cost of an asset protection trust can be tricky, seeing as so many factors contribute to the overall price. There is no set cost that can be determined, but there are estimates that can be worked with to figure out a broad range and overall estimate

Location Costs 

Domestic asset protection trusts have different initial fees to that of a foreign asset protection trust. The maintenance costs also differ, as foreign trusts will always have higher expenses than domestic trusts due to compliance costs that are established by authority figures. 

Moving assets offshore has a bad reputation, seeing as it could be a way of avoiding tax payments, so the government ensures higher costs are in place to avoid such a thing. This is why the initial phase and the maintenance phase of foreign protection trusts are more costly. As a result, you can expect to pay:

• $12,000- Domestic Asset Protection Trust 

• $25,000- Foreign Protection Trust 

The foreign asset protection trust is over double the amount for the domestic asset protection trust. But the extra price could be worth it, as assets could be much safer in another country, outside of the United States. While not a monetary fee, one should consider the amount of time and effort it will take to establish a foreign asset protection trust due to the amount of administration work that needs to align with government regulations. 

Establishing foreign asset protections trusts come with a list of requirements and files that need to be formed. Different income tax consequences should also be considered, as that could add to the overall costs of the asset protection trust. 

If you choose to stick to domestic costs, there are ways to try to find more affordable deals, as you can set up asset protection trusts in other states where it would be cheaper, such as Wyoming or Nevada. Luckily you do not need to set up the trust in the state you are living in, this added sense of flexibility creates more opportunities for better options.  

Maintenance Fees

As mentioned previously, maintenance fees play into the overall costs of asset protection trusts, as there needs to be a constant level of evaluation when it comes to these trusts to ensure they are still operating as they should. 

Maintenance fees come in the form of lawyers and the specific trust company. By paying these fees, administration expenses are taken care of, ensuring that your trust operates as it should, and it creates a certain level of organization when it comes to managing your asset protection trust. This will also cover the cost of the completion of financial transactions. 

Estate Planning Attorney 

Outside of the asset protection trust, you can hire an estate planning lawyer to help you with questions and concerns that relate to asset protection costs. While expenses like this do not tie directly to the actual protection trusts, there is a link between the two, and external costs related to asset protection trusts should be considered in order to come to the best estimation of what the overall costs will be for the specific asset protection trust. 

Final Takeaway

Asset protection trusts can have high short-term costs, but they deliver when it comes to long-term benefits.  The business world can be risky, and assets are usually the victim when it comes to business and personal losses. Money can be saved in the event of an entrepreneur or business running into legal issues where creditors can claim assets. 

The actual costs of asset protection trusts are difficult to pinpoint, but a broad overview showcases that it is a hefty expense that requires thinking and investment that will ensure the best protection.