Does a living trust protect assets from creditors?
All trusts are not created equal. A living trust, or revocable living trust, is one of the most common trusts utilized by estate planning attorneys. It’s a great way to avoid the hassles of probate, but will the assets inside of the living trust be protected from creditors? Check out the video to learn more!
Colin Ley is a Seattle asset protection attorney. He is also the co-founder of LayRoots along with his wife, Shreya.
Does a Living Trust Protect Assets Video Transcript
Hi, Colin Ley with LayRoots. I’m here to talk to you about revocable living trust, and asset protection. As an asset protection attorney I get asked quite a bit if there’s any asset protection provided with a revocable living trust. The answer is no. There is no asset protection in your revocable living trust, and the reason is because you can still control things in your trust. This little box here represents your revocable living trust, you as the creator, you can put things in the trust, you can take things out of the trust. You’re usually also serving as the trustee, so you can control everything about it. The basic reason that there is no asset protection is because of that control. As long as you can control things, you could take them out. If you have a creditor for example, you could take things out and you could give them to the creditor. That’s why the revocable living trust doesn’t have asset protection in it.
Usually a trust with asset protection is irrevocable instead of revocable. An irrevocable trust lacks that control. Essentially you don’t have the control to grab an asset in your trust and give it to your creditor. You do though with a revocable living trust, and therefore no. No protection from that. It’s a great way to avoid probate, but now a good way to protect your assets from creditors. If you have any questions hit us up, and thanks for watching. Take care.