The common concept is that to protect assets one needs to simply set up an Irrevocable Trust. However, just setting up an irrevocable trust has some serious drawbacks.
Pitfalls of the Common Irrevocable Trust
No ownership,
no control.
You retain no ownership, control, or right to access those assets. In other words, the gift is irrevocable. A traditional irrevocable trust protects assets because they are no longer yours!
Tax return
complications.
Since the trust is a true gift of your assets you have both gift tax considerations and income tax complication, every year – yes that means tax returns!
Forces you to give your assets away.
As you can imagine, the biggest problem with this type of trust is that most people are not ready, or not in a financial position, to give all their assets away just to protect them.
Conventional Irrevocable Trust v. The Bridge Trust®
The Bridge Trust® is a special type of irrevocable trust which can both protect your assets, while keeping them available for YOU to use. It also has a simple “grantor trust” tax status, which means there is no need for an additional tax return or layer of trust taxes.
To understand how the Bridge Trust works, I recommend you review the Key Concepts of Asset Protection video series.
Conventional Irrevocable Trust v. The Bridge Trust®
| Feature | Standard Irrevocable Trust | The Bridge Trust® |
| Trust is Irrevocable | ||
| Trust can protect assets | ||
| Clients Retain Use of Those Assets | ||
| No Gift Tax Return | ||
| No annual income tax return | ||
| Trust is Flexible | ||
| Trust can move offshore | ||
| Client can retain control of trust |
