Estate Planning

Living Trusts Are Revocable And Not An Asset Protection Tool

By Jennifer Sawday

It comes up all the time.

A call comes in from a potential client: "I need to set up a living trust now to protect my assets. "

Generally, if the person (called the settlor) who created the living trust and transfers property to this living trust has retained the right to revoke the living trust then he also retains an interest in the trust assets. There is no protection from outside entities or creditors regarding what has been transferred into the living trust.

In other words, a living trust is known as a revocable trust.  As such, living trusts are not considered a vehicle for asset protection.  A living trust is used mainly to allow assets to transfer at death without going through probate or to allow a co-trustee or successor trustee manage assets in the event of incapacity of the settlor of the trust.

Consult with an estate planning attorney to learn more about living trusts. And if you have asset protection questions, be sure to mention your questions and concerns with your attorney as there may be other options out there based on your situation.

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Estate Planning, Probate and Trusts involve complex areas of law. Individual circumstances must be considered before any advice can be given.  The general information above is not to be construed as legal advice, which can only be given after consideration of the unique facts of each matter. Please seek the advice or counsel of your attorney, financial advisor or CPA as it may be appropriate.

Full post as published by Estate Planning Practice Blog on April 29, 2008 (boomark / email).