Life is full of risks. Every day someone, somewhere (let’s call him “Bob”) rushes to an attorney and asks, “Is there anything I can do to protect my assets?” Chances are, Bob is facing one of these four threats:

When you are facing these threats, it is difficult, often impossible, to protect your farm and other assets. The law generally does not allow Bob to hide his own assets from his own mistakes, divorce, care needs or taxes.

However, if Bob is very fortunate his attorney may be able to give him some good news. It depends on what has happened in the past. Let’s imagine the perfect history.
 

Decades ago, Bob got his start because his parents gave him a special type of trust with some land and money inside. At the time, Bob didn’t appreciate it all that much. It seemed like a hassle to manage the assets within the trust; it would have been simpler to just have the money and land in his own name. But, he followed good advice over the years. He could take money out of the trust, but instead he invested every bit of the trust money in more land within the trust. He could not add his own money to the trust, but he did everything he could to grow it. For example, he paid maximum rent into the trust as he farmed the land. Later when his parents died, they added Bob’s inheritance to the same trust. Along the way, Bob’s own balance sheet of assets outside the trust—his operation, with operating debt—remained relatively small.

If this is the history, when Bob rushed in to see the attorney, most of what he thought of as “his” assets were not technically his: they were in the trust his parents started for him. Most of “his” assets were safe because of two important things. First, when assets were given to Bob, his parents had the vision to place them in a protective trust, and second, Bob diligently managed what he received in that trust for maximum growth.

The type of trust described was not a living trust. It was not something that Bob could have established for himself, or into which he could put his own assets. It was started for him by someone interested in his future, someone who placed him in control, who trusted him to make the most of what he was given. Which he did. As Norman Rockefeller said, “The secret to success is to own nothing, but control everything.” In this type of trust, Bob had control without the risks associated with ownership.

If you receive such an asset protection trust, here are five keys for making it work.

If someone thought ahead and gave you a trust, make the most of it. Someday you will be glad you did.

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Originally published in the Prairie Farmer® in April 2018