Several of my clients established Asset Protection Trusts ("APTs") in July of 2007. That is the month when they first became legal in Tennessee. Unfortunately, one of my first clients to establish a Tennessee APT died recently. She never experienced creditor problems and never needed the asset protection benefits afforded by the trust.
When she became very ill earlier this year, she transferred her remaining assets to the APT. She also exercised her testamentary limited power of appointment over the APT to make some specific bequests to friends and to take advantage of the absence of federal estate taxes in 2010. The document for making this exercise was analogous to an amendment to a revocable trust.
During the last few weeks of her life, the Trustee managed the trust assets for her benefit. Upon her death, the APT became a Will substitute. My client had a “pourover” will, but it will not be needed. Currently, the Trustee is administering the APT in the same manner that a revocable trust would be administered.
If you are going to employ a funded revocable trust as part of your estate plan, you should consider utilizing an APT. An APT gives you the same benefits as a revocable trust and provides asset protection during your lifetime.