Self-Settled Trusts

Not everyone inherits assets in a trust that someone else created for them. If you built your own wealth, the planning question is different: can you establish a trust using your own assets and still be a beneficiary?

That is a self-settled trust. You create it and put in assets, and you are also a person who can benefit from it. A revocable living trust used in estate planning is a familiar example of this arrangement.

But self-settled alone does not mean asset-protected. The earlier concepts must work together. For the approach discussed in the series, the trust must combine self-settlement, irrevocability, and spendthrift protection, with properly defined ownership and control.

The catch is that not every place allows that combination to protect your assets from your own creditors. A trust that works one way under one state’s law may work differently somewhere else.

So the next question is not just “Can I create a trust for myself?” It is “Which laws apply to the trust I want to create?” That is the point of jurisdiction.