A Veterans Asset Protection Trust is a special type of trust that allows a veteran to protect their assets and qualify for veteran benefits. In this article, we will go over the basics of setting up a Veterans Asset Protection Trust and how they work.
How It Works
A Veterans Asset Protection Trust is a type of irrevocable trust. You, as the veteran, create the trust. You will also need to fund it with your current assets. Additionally, you will need to name a trustee, which is the person who will control the fund in the trust on your behalf. You give up ownership of your assets by placing them in the trust. Such assets are not included when determining eligibility for government assistance. This helps you to qualify for benefits you might otherwise not be able to receive.
Setting Up a Valid Trust
For a Veterans Asset Protection Trust to accomplish its purpose, it must be set up properly. There are five core features of a valid Veterans Asset Protection Trust. These include:
- The trust must be set up at least 3-5 years before you need government benefits.
- A trusted person must be named to serve as the trustee during your lifetime. You cannot name yourself or your spouse as trustee. Most people name a child or children to act in that capacity.
- All trust assets must be held in trust for your lifetime. You cannot have access to income or principal, and you cannot be listed as a beneficiary.
- The trust must have its own Employer Identification Number (EIN) and file an annual tax return.
- Assets must be held in the trust for at least three years.
When deciding if a Veterans Asset Protection Trust is right for you, there are some factors you will need to weigh. This trust can be a very useful tool for some, allowing them to qualify for the assistance they need. But is it not a viable choice for everyone. You need to have someone you can trust to serve as your trustee, and you need to be willing to give up control of your assets. You will need to determine if the benefits outweigh the concerns for your situation.
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