When you are thinking about asset protection and estate planning, you may think that the two go hand-in-hand. Sometimes that’s true, but not always. If you go to the trouble of creating a living trust to hold your assets, you think that this keeps them out of creditor’s hands. The common revocable living trust used in estate planning is not going to keep your assets safe from creditors.
There are two types of living trusts: revocable and irrevocable. A revocable trust is just that – it can be revoked at any time. The benefits of establishing a revocable trust include avoiding probate and having control over your assets during your lifetime. Because probate is a matter of public record, a living trust creates privacy in that the general public won’t be privy to information regarding your assets, or have any knowledge regarding the distribution of your assets at the time of your death.
If you’re looking to establish a trust to protect your assets from creditors, you need to consider an irrevocable trust. An irrevocable trust still avoids probate, but you can no longer control the assets, your trustee does. Also, you are not able to revoke the trust. However, because the assets aren’t considered yours anymore, they are not available to creditors. Those with assets of high value usually establish complex trust, sometimes set up with an offshore trustee, as a form of asset protection.
To learn more about your asset protection options, contact us today. We will work with you to develop a personalized plan that suits your financial situation.