Estate Planning

Testamentary trusts

Asset protection example

Using a different example, let’s say you run your own business which is having financial trouble and it looks as though you may have to liquidate it and declare bankruptcy.

If you were to receive the $2.5 million directly, this money would potentially be available to the creditors, meaning your uncle’s estate could be paying for your failed business.

If this money was left to a testamentary trust, the money is not legally owned by you.

This would make it more difficult for creditors to get access to any lump sums from the estate.