Do you have a Living Trust? If so, you should know that your Revocable Living Trust does not offer asset protection. Unlike an Irrevocable Trust, a Revocable Trust can be changed because you are the trust maker, beneficiary and trustee. The Revocable nature of a Living Trust and the fact that you receive benefit from assets within the Trust means your assets are not protected.
Trust Creator and Trustee
As the creator and Trustee of your Trust, you have full power over any changes that need to be made. Once you have signed a Living Trust agreement, you can fund your assets into that Trust while retaining control of those assets. Assets in a Living Trust can be removed at any time. Because they can be removed, a court could order you to remove them to pay a lawsuit plaintiff, a creditor or a divorcing spouse.
As long as you are alive, you are the beneficiary of your Trust. Even if you become disabled and your chosen successor Trustee must step-up and manage your Trust, you will still have full benefit of all Trust assets. You can receive income made by assets and assets can be sold for your benefit. Since you are the beneficiary, Trust assets are considered part of your estate and can be taken to settle a court case against you.
Your Living Trust also does not offer asset protection for your family members after you pass away. Even if you never have a need for asset protection, once your loved ones receive Living Trust assets, those assets become available to their creditors and other claimants.
Your attorney can help determine what assets are best left out of your Living Trust and what ways to protect those assets for your benefit and for the benefit of your family.
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