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.

same day cleaning service Des Plaines ..

In The News:

Amazon Ring's new facial recognition feature sparks privacy controversy as Electronic Frontier Foundation critics argue the AI upgrade expands surveillance risks.

New Android banking trojan Sturnus steals credentials, reads encrypted messages and controls devices.

Denmark's 3D-printed student village proves automation builds 36 apartments faster than traditional methods. Skovsporet project shows housing future.

Discover Android's new Sound Notifications feature that alerts you to smoke alarms, doorbells, and baby cries even when wearing headphones.

New SantaStealer malware reportedly threatens holiday shoppers with password theft. This Christmas-themed info-stealer targets browsers and crypto wallets.

The Christmas season brings a surge in Netflix phishing scams targeting shoppers with fake emails. Stacey P received convincing scam but verified account first.

San Francisco Giants invite Jamie Grohsong to throw ceremonial first pitch at Oracle Park after he learned to play baseball with a bionic hand following an injury.

FBI warns cybercriminals are stealing family photos from social media to create fake proof of life images in virtual kidnapping scams targeting victims.

Instagram's new 'Your Algorithm' tool lets you control your Reels feed in real time. The app now gives you power to customize what videos you see.

Major Marquis fintech breach exposes 400,000-plus Americans' data through unpatched SonicWall vulnerability, with Texas hardest hit at 354,000 affected.

Free up iPhone storage fast by clearing large photos and videos from Messages app. Simple steps for iOS users to delete attachments without losing chats.

Scammers are flooding inboxes with fake tracking alerts that mimic real carriers, exploiting the holiday rush to steal logins and personal data.

The Fox News AI Newsletter brings you the latest news on AI technology advancements and the challenges and opportunities AI presents now and for the future.

Texas family reunites with missing 11-year-old cat Grayson after 103 days using Petco Love Lost's AI photo matching technology and community help.

Tired of AI customer service loops? These insider tricks help you escape "frustration AI" and get real human help when you need it most for urgent issues.

Unlock richer audio from your streaming apps with simple tweaks to volume normalization, equalizer settings, and quality preferences for cleaner sound.

Scammers are sending fake Facebook settlement payout emails that mimic legitimate notices from the privacy settlement administrator to deceive users.

Holiday shopping scams surge as fake refund emails target distracted consumers during Black Friday and holiday seasons, costing Americans billions annually.

The AI-powered IRMO M1 exoskeleton features four modes, including turbo, eco, training and rest for hiking, running, cycling and sports with eight-hour battery life.

OpenAI announced upgrades for its ChatGPT Images platform on Tuesday, saying the program can now make more precise edits and produce images more quickly.

Chrome for Android now turns web articles into AI-powered podcast conversations. Get hands-free browsing with Google Gemini's natural audio summaries.

LastPass faces $1.6 million fine from U.K. regulators after 2022 data breach exposed 1.6 million users. Password manager failed proper security controls.

Petco disclosed a data breach exposing customer Social Security numbers, financial account details, and driver's license information due to a software error.

Baseball teams can now analyze complete swing mechanics in normal training environments using Theia's markerless AI system that processes standard high-speed footage.

Smart home hacking fears overblown? Expert reveals real cybersecurity risks and simple protection tips to keep your connected devices safe from hackers.

Living Trusts: Do They Protect Your Assets From Creditors?

Wealth Building