Unfortunately, most people think that once assets are placed in a trust, they are protected forever! However, this is simply not the case. If a trust is to be a “sham”, then the asset protection may be lost. So what is a Sham Trust? The concept of Sham Trust has evolved over time, but for our purposes, it can be seen as something that is not authentic, a disguise or a facade.
Professional trustees often “rescue” of a trust of stigma sham. They do this by faithfully and properly carrying out the work to be a professional trustee. This means that they reviewed the activities of the Trust and ensure that all the paperwork was done correctly.
Why is it so important? Trustees have a legal obligation to discuss, agree and document the activities of the Trust is undertaking. When this does not work, the door is open for a creditor or even a beneficiary to allege that the trust is a sham, and if the claim is successful, the protection of property may be lost and the trust property may be ” to grasp. ”