Asset Protection in Revocable Living Trusts

Revocable living trusts are a wonderful estate planning tool. A fully funded revocable living trust avoids probate, thus enhancing privacy as well as saving your loved ones significant legal fees and court costs. Importantly, revocable living trusts can also offer asset protection to beneficiaries. Here’s how.

If someone receives money outright under a will or payable-on-death designation, that money is potentially subject to their creditors, the holders of lawsuit judgments against them and divorcing spouses. By contrast, one can structure a revocable living trust so that, upon the death of the trust’s creator, the money and property continue to be held in trust for the named beneficiaries. There is flexibility in terms of how much access beneficiaries have to the trust. However, for the greatest asset protection, the trust should be managed by a disinterested trustee (i.e. not related to the beneficiaries or employed by them) who makes distributions to the beneficiaries in his or her sole discretion (or perhaps for very specific purposes such health and education).

Life is unpredictable. You have spent a lifetime working hard to provide for your family. Give yourself the peace of mind in knowing that your estate will be protected with a revocable living trust long after you are gone.