Asset Protection Trusts & Special Purpose Trusts
Protecting What You’ve Built, Preserving What You Intend to Pass On
Wealth that is not properly protected is wealth that is exposed. Whether the threat comes from creditors, litigation, divorce, business risk, or the enormous tax burden that can be imposed on an estate at the wrong moment, the difference between a family that thrives across generations and one that watches its wealth erode often comes down to a single decision: whether the right trust structure was put in place before it was needed.
Selig & Associates works closely with one of the finest trust attorneys in New York and Florida to design, implement, and defend sophisticated trust structures for clients who understand that protecting wealth requires more than a simple will. Our collaborative approach pairs elite legal drafting with forensic-level financial and tax analysis, ensuring that every trust we help design is not just legally sound on paper, but structurally capable of withstanding scrutiny from the IRS, creditors, and courts alike.
Why Asset Protection Trusts Matter
An asset protection trust is designed to shield assets from future creditors, lawsuits, and claims while still allowing the person who created it meaningful, controlled benefit. Properly structured domestic asset protection trusts, established in favorable jurisdictions, can place assets beyond the reach of most future creditors while the grantor still enjoys discretionary distributions.
But not all asset protection trusts are created equal. The strength of the protection depends entirely on the details: which state’s law governs the trust, how the trust is funded, whether transfers into the trust could later be challenged as fraudulent conveyances, and how the trust interacts with the grantor’s overall financial and tax picture. This is precisely where most attorneys, however skilled in drafting, need a forensic financial partner who can stress test the structure before a creditor or the IRS ever does.
Special Purpose Trusts We Help Structure
Every family’s situation is different, which is why we work alongside trust counsel to design structures tailored to specific goals, including:
Domestic Asset Protection Trusts, self-settled trusts established in favorable jurisdictions that allow a grantor to retain discretionary access to trust assets while achieving meaningful creditor protection
Spousal Lifetime Access Trusts, often called SLATs, which allow one spouse to make gifts to an irrevocable trust for the benefit of the other spouse, preserving indirect access to assets while removing them from the taxable estate
Intentionally Defective Grantor Trusts, structures that are deliberately designed to be treated as owned by the grantor for income tax purposes while being excluded from the grantor’s estate for estate tax purposes, an intentional mismatch that, when properly executed, can produce extraordinary long-term tax efficiency
Dynasty Trusts, designed to preserve wealth across multiple generations while minimizing exposure to estate tax and generation-skipping transfer tax at each successive generational transfer
Incomplete Gift Non-Grantor Trusts, sophisticated structures, often established in states such as Nevada, Delaware, or Wyoming, that can allow high net worth residents of high tax states to legally minimize state income tax exposure on trust income
The Tax Issues That Make This Work Genuinely Complex
Trust taxation is one of the most misunderstood areas of the entire tax code, and the consequences of getting it wrong can be severe. This is where our forensic accounting expertise becomes essential to the process.
The Grantor Trust Rules. Under Internal Revenue Code Sections 671 through 679, whether a trust is treated as a grantor trust or a non-grantor trust for income tax purposes has enormous consequences. A grantor trust’s income is taxed to the individual who created it, while a non-grantor trust is taxed as its own separate entity. The line between the two is technical and fact specific, and a poorly drafted trust can inadvertently trigger grantor trust status, undermining the very tax benefits the structure was designed to achieve.
Compressed Trust Tax Brackets. Non-grantor trusts reach the highest federal income tax bracket at an extraordinarily low level of income, often at levels below 15,000 dollars, compared to hundreds of thousands of dollars for individuals. Without careful planning around distributable net income and strategic distributions, a trust can find itself paying tax at the top marginal rate on income that would have been taxed far more favorably in the hands of an individual beneficiary.
Estate Tax Inclusion Risk. Under Internal Revenue Code Sections 2036 and 2038, a trust that appears irrevocable on its face can still be pulled back into the grantor’s taxable estate if the grantor retains too much control, benefit, or the ability to alter beneficial enjoyment. Many trusts that fail to achieve their intended estate tax benefits do so not because of poor intentions, but because of overlooked technical retained powers.
State Income Tax on Trust Residency. Trusts, like individuals, can be considered residents of a state for income tax purposes, and the rules vary enormously from state to state, based on factors such as the residency of the grantor at the time the trust was created, the residency of the trustee, and the location of trust administration. Sophisticated planning around trust situs can produce significant, entirely legal state income tax savings.
Basis Consistency and Step-Up Planning. Following the Tax Cuts and Jobs Act and subsequent IRS guidance, the interaction between lifetime gifting into trusts and the step-up in basis available at death has become far more nuanced. Assets transferred into certain irrevocable trusts may permanently forfeit a future step-up in basis, creating a hidden capital gains tax liability that is often not discovered until the assets are eventually sold, sometimes decades later.
Fraudulent Conveyance Exposure. Perhaps the most critical issue of all, a trust that is unfunded or under funded relative to the grantor’s financial condition at the time of transfer can be unwound entirely by a court if a creditor demonstrates the transfer was made to hinder, delay, or defraud a known or reasonably foreseeable creditor. This is precisely where David Selig’s forensic accounting background becomes indispensable, because a trust structure is only as strong as the financial analysis performed before it is funded.
Why Selig & Associates
Trust attorneys draft extraordinary documents. But documents alone do not protect wealth if the underlying financial analysis is incomplete. Selig brings a forensic accounting lens to every trust engagement, analyzing the client’s full financial picture, identifying potential fraudulent conveyance exposure before it becomes a problem, modeling the true after tax impact of grantor versus non-grantor status, and stress testing every structure against the scenarios most likely to be challenged in court or scrutinized by the IRS.
Paired with one of the finest trust attorneys in New York and Florida, this combination of elite legal drafting and rigorous forensic financial analysis is what allows Selig & Associates to help clients build trust structures that are not only sophisticated on paper, but genuinely resilient when it matters most.
Protect Your Wealth Before You Need To
The most effective asset protection planning happens long before any claim, lawsuit, or crisis ever arises. Waiting until a threat is on the horizon dramatically limits the available options and can expose even well-intentioned transfers to challenge.
Call Selig & Associates today for a confidential consultation to discuss whether an asset protection trust or special purpose trust structure is right for your family’s circumstances.
(212) 974-3435