Trust & Estate Quick Tip #7 – Revocable Trusts Does Not Provide Protection Against Creditors

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A revocable trust, also referred to as a living trust, is a legal agreement that permits the transfer of your assets to a trustee for the benefit of designated beneficiaries. One significant advantage of a revocable trust is that it allows you to maintain control over the assets within the trust during your lifetime. You have the flexibility to modify the trust whenever necessary, such as adding or removing assets, changing beneficiaries, or even revoking the trust altogether. Moreover, by holding assets in the trust, you can bypass the probate process, which can otherwise be both time-consuming and expensive.

There is a common misconception that establishing a revocable living trust and placing assets into it offers protection against creditors. However, it is important to note that a revocable living trust does not provide such creditor protection.

In contrast, an asset protection trust is a type of trust structure designed to safeguard an individual's assets from creditors. It serves as a vehicle for holding assets with the explicit purpose of shielding them from potential claims by creditors.

To learn what the best options are for your situation, contact an estate planning lawyer!

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