Some states are more well known as Asset Protection Friendly laws.  Below is come great information from  Alaska Trust Company 

http://www.alaskatrust.com/

Alaska Trust Company's mission is to provide reliable wealth management approaches and innovative trust and investment management services.

Alaska is the leader in updating its trust laws that provide all Americans the ability to access unique estate and financial planning options as well as providing the most comprehensive asset preservation statutes in the country.

We are committed to providing the finest services to our clients. With our unique philosophy of customizing solutions and internal and external expertise, we are able to "think outside the box" to provide strategies that will have a positive impact for our clients in meeting their financial and estate planning goals.

REASON ONE

PLR 200944002; IRS has agreed that the Grantor can be a Trust Beneficiary of an Alaska Self­Settled Spendthrift Trust and the assets of the trust will not be included in the Grantor's Estate. Alaska is the only state that has received a favorable ruling from IRS.

REASON TWO

Alaska Was the First State to Provide For Self­Settled Spendthrift Trusts

Alaska has the best trust spendthrift statutes for both the grantor and other trust beneficiaries. Alaska provides for "self­settled" spendthrift trusts which allows the grantor to set up an irrevocable trust, be a discretionary beneficiary and avoid having the assets be subject to creditor claims of either the grantor or any other beneficiary. Also, the assets in such a trust may be excluded from the grantor's taxable estate even though the grantor is a trust beneficiary. Therefore, there is no reason to go "offshore" (that is, to create a self­settled trust in a jurisdiction outside of the United States). Alaska has no special "class" of creditors which, unlike the laws of other states, would permit those creditors to attach the assets of the trust. Alaska allows creditors to attach trust assets in a self­ settled trust only upon proving by actual fraud (and not "constructive" fraud).

Property subject to the so called "Crummey" or "5 X 5" withdrawal powers is not subject to creditor claims of the beneficiaries who holds such powers. Courts cannot compel distributions or attach beneficial interest. A beneficiary may be given a special power of appointment and the trust assets will still be protected from creditor claims. Alaska is the only state that defines an "existing creditor" which effectively puts a defined limit on when a claim against a self­settled trust may be made.

REASON THREE

Alaska Has No State Income Tax on Trust Income

Therefore, trust beneficiaries can see the earnings in the trust compound free from state and local income taxes thereby providing extraordinary year­on­year returns. In addition, Alaska has no state gift tax and no intangibles tax.

REASON FOUR

Alaska Permits Perpetual (Dynasty) Trusts

Using perpetual trusts can significantly increase wealth passing from generation to generation by avoiding unnecessary estate, gift and generation­skipping transfer ("GST") taxes. In Alaska, trusts can last forever; however if a beneficiary exercises a special power of appointment the trust is limited to 1000 years. An Alaska Perpetual Trust is an excellent vehicle to enhance the benefits of the Federal exemption from the (the "GST" tax). If a family uses only $1 million of the "GST" exemption after 120 years with an after­tax return of 6%, the trust would be worth over $1 billion. If a trust was not used; the value of the property would be only about $68 million.

REASON FIVE

Additional Trusts with Creditor Protection

In Alaska the Grantor may retain an interest in the following types of trusts and have protection from creditor claims:

● Charitable Remainder Trust (CRT)

● Total Return Trust

● Grantor Retained Annuity Trust (GRAT)

● Grantor Retained Unitrust (GRUT)

● Qualified Personal Residence Trust (QPRT)

REASON SIX

Alaska Creditor Protected IRAs.

Alaska Law has a provision that the trust laws of no other state has: it permits an individual whose IRA is not protected from creditor claims under the law of his or her own state (such as California) to use Alaska law to provide that protection. The reason is that Alaska's self­settled trust law applies to any IRA that is in the form of a trust that is governed by Alaska law.

REASON SEVEN

Opt ­ In Community Property Trusts

Alaska is the only state that allows couples to opt into community property for some or all of its assets, by using an Alaska Community Property Trust. Community property can provide unique income tax and estate tax savings. For example, upon the death of one spouse, the entire community property asset is "stepped­up" in basis and not just the half of the asset included in the gross estate of the spouse dying first.

REASON EIGHT

Best Trust Decanting Statute

Alaska has the most powerful decanting law, which is the paying of trust assets from one trust to another. Alaska's decanting statute (paying trust property to another trust) is the broadest and most comprehensive of all decanting laws. Many times the terms of the trust do not permit the trustee and beneficiaries to take advantage of planning opportunities. The Alaska decanting provisions can be made to apply to a trust created outside of Alaska which can be used to provide significant advantages to the trust beneficiaries.

REASON NINE

Pre­Mortem Probate

Alaska has just adopted legislation that permits individuals to have their wills admitted to probate before they die essentially eliminating any risk of a will contest, which normally is an emotional and financial wreck for the family members involved. The reason, of course, is that the person who signed the will can testify before the court establishing the document is a valid will. Although three other states (Arkansas, Ohio and North Dakota) also permit such pre­death probate, Alaska has become the first state to permit nonresidents of its state to have their wills admitted to original probate procedures. Alaska, like New York, has long permitted non­residents of its state to have their wills admitted to original probate and several individuals have used this process. In addition, Alaska has become the first state to have an explicit procedure to allow individuals who have created trusts during their lifetimes to have the trusts "proved" before they die. This too reduces the risk of post­death squabbles over the spoils of an owner's death and ensures his or her wishes will be followed. Alaska also has one of the strongest "no contest" legislation for trusts­which essentially allows any beneficiary to be "disinherited" for taking action prohibited by the trust instrument.

REASON TEN

Trust Incontestability Clause

This provision provides that lifetime trust provisions that "penalize" (for example, "disinherits") a beneficiary for taking certain action, such as "contesting" the trust or the decedent's will or suing another family member will be enforced even if probable cause exists for the beneficiary to have instituted the proceeding.

REASON ELEVEN

Alaska's Unique and Flexible Trust Provisions

Grantors and beneficiaries may increase or decrease trustees duties and responsibilities providing for the most reliable ways to accomplish their goals.

Alaska law permits a grantor to separate the trust's investment duties, distribution duties and administrative duties by appointing different trustees for each area of those areas ofresponsibility. A trustee that has not been given a responsibility cannot be held liable under Alaska law for the other trustee's actions. Non­residents of Alaska can have their will probated under Alaska law. The advantages of this legislation are:

● It should allow the estate to avoid state and local income tax during the

 Probate administration

● It should avoid any statutory executor/personal representative fees and/or

  Attorney’s fees

● The probate process in Alaska is very simple and straightforward which

  should save time and money

● It seems that any trust that was created under the will would then have the

  Ability to qualify as an Alaska perpetual trust and the other protective

  Provisions of Alaska law

REASON TWELVE

Life Insurance Trusts

Alaska has one of the lowest life insurance premium taxes. With Alaska's low tax and Alaska Trust Company's experience in handling large life insurance policies make Alaska and Alaska Trust Company the only choice in setting up an Irrevocable Life Insurance Trust (ILIT).

REASON THIRTEEN

Total Return Trusts

In Alaska, traditional income trusts can be converted into "total return" trusts which means the trust will pay the "income" beneficiary a percentage of the annual value of the trust. This allows the trust to align the interests of all beneficiaries' whether income or remainder beneficiaries. In other words the trustee may invest the assets that will provide the best overall return (whether by current income or appreciation) for all beneficiaries, thus reducing tensions between current and future beneficiaries.

REASON FOURTEEN

Best Limited Partnership and Limited Liability Statutes

Alaska's laws give Limited Partnerships (LP's) and Limited Liability Companies (LLC's) maximum flexibility and asset protection. Courts cannot terminate Alaska LP's or LLC's thereby preventing creditors of the partners or member from attaching the assets of the LP or LLC. Unlike the default rules under most state laws, an Alaska LP or LLC does not go out of existence upon the death of a general partner of a limited partnership or the managing member of a limited liability company. Alaska has eliminated any right to demand to be bought out on 6 month or other notice. In fact, under default state law, a partner is entitled to distributions only as provided by the governing document. These provisions provide for optimal tax treatment and valuation discounts. In Alaska, LP's and LLC's can be set up "on­line" for immediate formation.

By statute, the only remedy for a creditor who attacks a partner's interest in an LP or

LLC is a "charging order", which is a court judgment against the LP or LLC.

REASON FIFTEEN

Confidentiality

Alaska provides the highest confidentially to grantors and beneficiaries because trust court filings generally are not required. Privacy and confidentiality are important concerns of Alaska Trust Company. If a court filing is needed, it can be done efficiently and in a cost efficient manner because of Alaska's flexible court processes.

REASON SIXTEEN

Customized and Innovative Investment Management

Alaska Trust Company provides a Unified Management Account approach. This allows for the best of two worlds: access to the expertise of the nation's finest money managers, yet still maintaining complete control over the investment process. This provides for

● a custom designed multimanager portfolio

● independent research and conflict­free advice

● tax efficient strategies that help clients keep more of what their investments earn.

REASON SEVENTEEN

Advantageous Charitable Remainder Unitrusts

Alaska law allows capital appreciation to be considered income. This allows for an attractive income tax deferral strategy when using Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT).

This is a great discussion of Alaska as an Asset Protection Location.  

 Please contact Dwayne K Dowell, CPA/PFS at dkdowell@dkdcpa.com or call (502) 271-8452 for Wealth Strategy and Asset Protection Planning.  

Life insurance has many uses, including income replacement, business continuation, and estate preservation. Long-term care insurance provides financial protection against the potentially high cost of long-term care. If you find yourself in need of both types of insurance, a life insurance policy that combines a death benefit with a long-term care benefit may appeal to you.

Here's how it works

Some life insurance issuers offer life insurance with a long-term care rider available for an additional charge. If you buy this type of policy, you can pay the premium in a single lump sum or by making periodic payments. In any case, the policy provides you with a death benefit that you can also use to pay for long-term care related expenses, should you incur them.

The amount of death benefit and long-term care allowance is based on your age, gender, and health at the time you buy the policy. The appeal of this combination policy lies in the fact that either you'll use the policy to pay for long-term care expenses or your beneficiaries will receive the insurance proceeds at your death. In either case, someone will benefit from the premiums you pay.

Long-term care riders

The long-term care benefit is added to the life insurance policy by either an accelerated benefits rider or an extension of benefits rider.

Accelerated benefits rider --An accelerated benefits rider makes it possible for you to access your death benefit to pay for expenses related to long-term care. The death benefit is reduced by the amount you use for long-term care expenses, plus a service charge. If you need long-term care for a lengthy period of time, the death benefit will eventually be depleted. This same rider also can be used if you have a terminal illness that may require payment of large medical bills. Because accelerating the death benefit can have unfavorable tax consequences, you may want to consult your tax professional before exercising this option.

Example: You pay a single premium of $50,000 for a universal life insurance policy with a long-term care accelerated benefits rider. The policy immediately provides approximately $87,000 in long-term care benefits or $87,000 as a death benefit. If you incur long-term care expenses, the accelerated benefits rider allows you to access a portion, such as 3% ($2,610), of the death benefit amount ($87,000) each month to reimburse you for some or all of your long-term care expenses. Long-term care payments are available until the total death benefit amount ($87,000) is exhausted (about 33.3 months). Whatever you don't use for long-term care will be left to your heirs as a death benefit.

(The hypothetical example is for illustration purposes only and does not reflect actual insurance products or performance. Guarantees are subject to the claims-paying ability of the issuer.)

Extension of benefits rider --An extension of benefits rider increases your long-term care coverage beyond your death benefit. This rider differs from company to company as to its specific application.

Depending on the issuer, the extension of benefits rider either increases the total amount available for long-term care (the death benefit remains the same) or extends the number of months over which long-term care benefits can be paid. In either case, long-term care payments will reduce the available death benefit of the policy. However, some companies still pay a minimum death benefit even if the total of all long-term care payments exceeds the policy's death benefit amount.

Continuing from the previous example, if the policy's extension of benefits rider increases the long-term care benefit (the death benefit--$87,000--remains the same) to three times the death benefit ($261,000), the monthly amount available for long-term care increases to $7,830. On the other hand, if the extension of benefits rider extends the length of time the monthly long-term care benefit is available, then the monthly payments ($2,610) are extended for an additional 24 to 36 months beyond the initial number of months (33.3) available.

Other provisions

Typically, qualifying for payments under a long-term care rider is similar to the requirements for most stand-alone long-term care policies. You must be unable to perform some of the activities of daily living (bathing, dressing, eating, getting in or out of a bed or chair, toilet use, or maintaining continence) or suffer from a severe cognitive impairment.

An elimination period may also apply: you pay for the initial cost of long-term care out-of-pocket for a specific number of days (usually 30 to 90) before you can apply for payments under the policy. As with all life and long-term care insurance, the insurance company will require you to answer some health-related questions and submit to a physical examination before issuing a combination policy to you.

Is a combination policy right for you?

Deciding whether a combination policy is right for you depends on a number of factors. Do you need life insurance and long-term care insurance? How much life and long-term care insurance will you need? How long will you need it? Will the long-term care part of a combination policy provide sufficient coverage?

A long-term care rider may not provide as many features as a stand-alone long-term care policy. For example, the combination policy may not cover assisted living or home health aides. It also may not provide an inflation adjustment, an important feature considering the rising cost of long-term care. The tax benefits offered by a qualified long-term care policy may not apply to the long-term care portion of combination policies, which could result in taxation of long-term care benefits received from the policy.

What if your life insurance needs change as you get older and you find that you no longer want life insurance protection? It's not uncommon for people to drop their life insurance in their later years if there's no compelling need for it, but if you surrender the combination policy, you're also forfeiting the long-term care benefit it provides, usually at a time when you are most likely to need it.

And keep in mind that as you use your long-term care benefits, you're depleting the death benefit--a death benefit you presumably wanted to pass on to your heirs or perhaps use to pay for estate taxes.

Finally, compare costs of combination policies to other forms of life insurance, such as term insurance, and stand-alone long-term care policies. Depending on your age and health, the cost for the combination life policy may actually be higher than the total premiums paid for separate life insurance and long-term care policies, especially if your life insurance need is temporary (such as income replacement during your working years) rather than permanent.

Please e-mail me at dkdowell@dkdcpa.com or call me at 502.271.8452 to discuss.