Trust Attorneys Dallas TX Respects Explains If Trusts Can Protect Assets from Creditors
Many people believe if they go through all the troubles and hassles of creating a trust for money and property, they are automatically protected and those assets cannot get into the hands of anyone who could potentially sue you. However, unfortunately, this is often not the case. Some trusts do have the capability to protect your assets from claimants and creditors, but for the run-of-the-mill living trusts, protecting assets is not what they are used for. These types of trusts are the most commonly created in estate planning.
Revocable Living Trusts
A revocable living trust is the type of trust Dallas TX trust lawyers may recommend when you decide to create your will and take other steps in estate planning. The main purpose of this trust is to alleviate your family the stress and expenses related to probate after you die.
Avoiding probate is a good goal. Property that you leave to others in a living trust do not need probate court approval in order for it to be passed on to the beneficiaries, unlike property that is left in your will. This means your beneficiaries of the trust do not need to go through a probate court proceeding, which can take between six months and a year and can cost up to about five percent of your estate.
In addition to avoiding probate, there are other benefits of a living trust. If you should ever become incapacitated, your trustee can manage your trust assets. This can be very helpful in an emergency situation or a chronic, serious ailment.
Creditors and Revocable Living Trusts
Revocable living trusts have many benefits, however, protecting your assets against creditors is not one. Even though a trust is a legal entity, you are still in control of your trust assets, which is why your assets can still be accessed by someone with a claim against you.
When you create a revocable living trust, you most likely will name yourself as the trustee. By doing so, you have full access over the assets you put in and out of the trust. Another reason you are seen as the owner of the property in the trust is that because it is revocable, you are able to revoke it at any time. If you decided to revoke the trust, the assets would go back to being in your name.
What Trusts Can Protect Assets?
Although a revocable living trust is not able to protect your assets from creditors, there is an entire industry devoted to protecting your assets. If you put your funds into an irrevocable trust, the money will not be viewed as yours anymore and it will also not be able to be accessed by creditors. People who tend to worry more about having someone file a lawsuit against them sometimes create very complicated trusts with an offshore trustee. They could also set up limited liability companies, which are known as family limited partnerships.
If you are concerned about lawsuits and creditors, there are other methods to protect your funds, such as placing your funds in assets that the state protects from creditors. For instance, you are able to keep money in your retirement plan accounts even if you file for bankruptcy.
If you would like to find out how you and your family could benefit by setting up a trust as part of your estate plan, contact trust attorneys Dallas TX clients recommend from Brandy Austin Law Firm for a free consultation.