How Can an Irrevocable Trust Protect My Assets from Creditors?
When you set up an irrevocable trust, you are creating a legal arrangement that puts your assets into the care of another person. This person is called a trustee. Then these assets are administered to another group. Those are your beneficiaries.
You no longer have control over your assets or how they are distributed. The trustee is in charge of your assets, and your creditors cannot come after these assets now. They are, in some ways, no longer yours.
Can I Change My Irrevocable Trust Later?
Now every trust essentially works in a similar way, but the irrevocable trust is able to protect your assets from creditors due to one of its unique characteristics. Once this kind of trust is established, it cannot be changed. The trust agreement, sometimes called the trust instrument, cannot be modified for any reason in the future.
Should I Make a Revocable Living Trust Instead?
Maybe you are thinking that this seems like a big commitment though. There has to be some kind of way to change your trust’s terms, right? Perhaps a revocable living trust is a better arrangement for you.
This type of arrangement would allow you to change the trust instrument in the future. However, this is precisely the main aspect of a revocable trust that makes it a bad fit for anyone who wants to protect their assets from creditors. If your trust instrument can be modified you are, by definition, still in control of your assets. The argument can be made that you still own them even if a trustee is in charge because you can just change the terms of the agreement at any time.
Creditors would be quick to pounce on this. They would potentially be able to compel you to terminate your revocable trusts and give them those assets. This is why it is important to understand the specific terms of each kind of trust arrangement, and why it might be wise to consult estate planning attorneys before you try to manage your assets on your own.
Contact Our Estate Planning Lawyers
If you are ready to establish an irrevocable trust, make sure that everything is done right. Schedule an appointment with the experienced estate planning lawyers at Herting Law, PLLC. We will do everything that we can to help you protect your assets.
