Home
>
Wealth Building
>
Living Trusts: Do They Protect Your Assets From Creditors?

Living Trusts: Do They Protect Your Assets From Creditors?

A surprising number of readers want to know "Can a living trust protect my family's assets from creditors and lawsuits?"

I think there are some promoters out there that use this as a pitch to get people to set up a living trust using their services:

"Transfer your assets to a living trust and hide them from your creditors," are the claims.

Sorry, that's not the law.

Let's have a quick review of a revocable living trust. Basically a trust is "a legal arrangement where property is held for the benefit of someone." In other words, you "entrust" title to your assets to "someone" who is instructed to use and manage those assets per the terms of the trust document.

A trust is revocable if it contains language that allows you to change your mind and terminate or modify it. In California, the Probate Code specifically states that all trusts are revocable, unless specifically stated otherwise.

A trust is called a "living" trust because it is set up by you while you are living. If you set up a trust through your will, it's called a "testamentary" trust since it is created through your last will and testament.

The right to revoke your trust means you can remove any asset from the trust title at any time you choose.

Since you have the right to revoke the trust, you are treated as the legal owner of the trust assets for purposes of income tax law or creditor collection law.

So, the general, basic answer to the question, "Will my revocable living trust protect my assets from my creditors?" is no. Since you can remove any asset at any time, your creditor can force you to remove the asset.

Now there are types of "irrevocable" trusts that can be used for protection of "spendthrifts."

(That's the fancy term for someone who can't manage their own property due to lack of sophistication, gullibility, or other problems).

I know a family where one son spends money as soon as he gets it.

He gives it to friends, spends it on new toys, whatever. He just doesn't have a healthy concept of money and can't keep it. He is a classic "spendthrift."

In his parents' case, what they have done in their living trust is said, in effect, after they're both dead, the spendthrift son's share of the estate will be held in an irrevocable trust for his benefit.

He is to be given a monthly draw on the trust until he dies or until the money runs out.

In that case, the money in the "spendthrift trust" is sheltered from the son's creditors since he does not, nor did he ever, own the assets held inside the trust.

Sure, the creditors can get his monthly draw once he gets it, but the main trust is sheltered for his benefit.

That is a classic and perfectly legal way of sheltering assets from the creditors of a "spendthrift" using a living trust (it can also be done using a testamentary trust).

Good luck and until next time,

Phil Craig

P.S. Feel free to forward this on to any friends.

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=

http://www.LivingTrustSecrets.com

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= -=-=-=-=-=-=-=

Phil Craig is a licensed attorney and entreprenuer. He started practicing law at age 25 in 1979. He does not take on any more clients, but is advisor to some of the biggest names in the internet world. He shares his knowledge gained over the last 25 years at his Living Trust Secrets newsletter site: click here=========>http://www.livingtrustsecrets.com

** Attn Ezine editors / Site owners **
Feel free to reprint this article in its entirety in your ezine or on your site so long as you leave all links in place, do not modify the content and include our resource box as listed above.

If you do use the material please send us a note so we can take a look. Thanks.

Airbnb cleaning service Arlington Heights ..

In The News:

Red flags like processing fees, urgent countdowns and requests for full Social Security numbers expose fraudulent settlement sites targeting consumers.

Comprehensive analysis of Google Maps, Waze and Apple Maps examines usability, routing accuracy, data handling and features across the top navigation platforms.

Expert analysis reveals whether wired Ethernet or wireless Wi-Fi connections are safer for home internet use, plus practical steps to secure your network from attackers.

Australian construction robot Charlotte uses sand, crushed brick and recycled glass to 3D print fireproof, floodproof homes with reduced carbon footprint.

Cybercriminals are using fake invitation emails to trick recipients into downloading malware and stealing personal information and data.

Flying drones could help retailers fight a 93% increase in theft rates as Flock Safety promotes airborne security systems to track suspects and deter crime.

The Fox News Artificial Intelligence Newsletter brings you the latest news on the emerging technology every Saturday, highlighting top stories.

Hacker group Radiant stole data from 8,000 children at Kido nursery chain, demanding ransom and directly contacting parents with intimidation tactics.

As 18 states implement bell-to-bell cell phone bans, creative students use Google Docs, iMessage on MacBooks and Post-It notes to stay connected in class.

A sheriff's captain says deputies often spend hours writing reports between calls, but Axon's AI program, Draft One, helps them save crucial time in the field.

Sora 2, OpenAI's new video-generation app, can create AI-generated videos based on a singular prompt. The results are both mind-blowing and terrifying.

iPhone and Android users can reduce Wi-Fi calling battery drainage through settings adjustments, background app limits and stronger Wi-Fi connections.

Work email scams are becoming harder to detect as criminals use AI and spoofed addresses to trick employees into opening malicious attachments and links.

From her Arizona living room, Christina Chapman ran a covert hub that helped North Korean operatives infiltrate U.S. firms, netting $17 million in stolen salaries.

UC Santa Barbara researchers developed a soft robotic intubation system that achieved 100% success rates for experts and 96% for paramedics with minimal training.

Scammers exploit probate filings to target grieving families with fake fees and debts, Kurt "Cyberguy" Knutsson reports.

Automotive giant Stellantis becomes latest victim of widespread Salesforce breaches affecting companies like Google, Cisco and Adidas this year.

A woman from Washington reunited with her missing Maine Coon cat Louie after 11 days using Love Lost, a free AI-powered pet recovery platform.

Expert cybersecurity tips help Mac owners remove malware infections and strengthen defenses with antivirus software, password managers and system updates.

Meta's AI chatbot training rules bans sexual roleplay with minors and block access to child abuse material as regulators scrutinize its safety measures.

Online banking users face a new threat: web injection scams that overlay fake pop-ups to steal logins. Here’s how to spot them and protect your accounts.

Meta introduced Teen Accounts to Facebook and Messenger while launching a School Partnership Program for U.S. educators to report bullying within 48 hours.

Executive order signed by President Donald Trump tasks Robert F. Kennedy Jr.'s MAHA Commission with using AI to find new cures for childhood cancers.

New FileFix attack tricks Facebook and Instagram users into running malicious PowerShell commands disguised as Meta account maintenance to deploy StealC infostealer.

Step-by-step instructions help users migrate to Windows 11 while preserving emails, contacts, documents, and software licenses during the transition.

Living Trusts: Do They Protect Your Assets From Creditors?

Wealth Building