[k8svet]

(First, thanks for the hint. Looking into trusts in general has been on my todo list, but also) I guess I'll embrace the ignorance fully. What if I have a pile of money and no house, do I need a trust? What amount of money or (future) house do I need to justify a trust? What does the trust even do for me?

Or maybe a better question, where's the "oops I have a pile of money, now what" literature I should read?

[bruce511]

It's probably a good idea to talk to a financial advisor. You may need to talk to a few before you find someone who understands your goals and what is on offer. A good one will be able to explain in clear terms what each option accomplishes.

For me, the goal is to separate assets from liabilities. I own a business and that business has creditors, some of whom require me to be personally liable.

So any asset I own is "at risk". I'm not expecting a problem, but life happens sometimes.

If I have a house a creditor can force the business into bankruptcy, and my house can be lost. If the house is not in my name (say its in a trust, or perhaps my spouses name) then it's not "mine to give". In simple terms if I hold liabilities and my wife holds assets, (and we have a suitable marriage contract) then creditors can't take those assets.

Obviously making creditors whole is the goal, but that can be done well, or badly, depending on your juciness.

Everyone's situation is different. The legal framework is different in different places. Which us why you need an advisor in your country / state to assess your risks, and possible mitigations. Don't just take advice from the Internet, or even your buddies. You need to understand your goals and needs.

Trusts can be an important part of the equation, so that's sometimes a good starting point to evaluate advisors. Even if you don't need a trust you want to feel like the advisor understands them etc.

[chgs]

In the U.K a typical person will start a limited company which is limited by the assets it has, not factoring in the personal holdings of the directors.

However why would I give such a company credit unless it’s assets outstrip its liabilities?

[nothercastle]

In the USA you can’t get a limited loan. It’s theoretically possible but they don’t give them. All small business loans have a personal guarantee.

[bruce511]

Which is why its useful that you don't have personal assets.

[chgs]

Then you have no assets to offer in guarantee for the loan and thus can’t get one.

[bruce511]

This is the root of what I'm saying. YOU decide how much, and what assets, you want to risk.

YOU decide whether to risk your house or not. If you do do it, then at least you're doing it intentionally and not by accident.

Of course bank loans are the tip of the iceberg. Lots of creditors want personal sureties, not just on your loans but others too. Most of those sureties contain language like "all present AND FUTURE" debts. You got divorced 30 years ago? They don't care.

[bruce511]

I'm guessing you're not a bank?

Banks (and other financial institutions) make loans all the time that are not necessarily backed with collateral. This is reflected in the interest rate that you pay.