To recap, a revocable living trust is popularly used as an alternative to a last will to enable probate avoidance. Probate is a legal process that your estate must pass through before the heirs to the estate receive their inheritances.
People often take steps to avoid probate because it can be time-consuming and expensive. When you convey assets into a revocable living trust, the trustee that you choose when you create the trust distributes monetary resources to the beneficiaries after you die.
These distributions are going to take place outside of the process of probate. As a result, the beneficiaries will receive their inheritances in a timely manner.
These trusts are indeed revocable. On one level this term is self-explanatory. You can revoke or dissolve the trust entirely at any time. It would no longer exist. The property that you conveyed into the trust will once again become your direct personal property.
However, there is flexibility beyond this. You can act as the trustee and the beneficiary while you are living, so you never surrender control of the assets. Though the assets are technically in a trust for probate purposes, you can still do whatever you want to do with these resources.
Because you retain what are called “incidents of ownership,” assets that have been placed into a revocable living trust would not be protected from creditors, claimants, or divorce settlement proceedings.
While a revocable trust will not provide asset protection, there is also such a thing as an irrevocable trust. There are various different types of irrevocable trusts. To speak generally, assets that have been conveyed into an irrevocable trust would in fact be protected from attachment.
When you place assets into an irrevocable trust you can’t revoke it. Though it may be possible under certain circumstances through a special power of appointment, for the most part the terms of an irrevocable trust cannot be changed. You are truly and genuinely surrendering incidents of ownership.
In addition to the utilization of irrevocable trusts there are other ways to protect assets. People who may face litigation associated with their business practices often use limited liability companies to separate personal assets from business assets.
Family limited partnerships can also be effective when you are looking asset protection.
Asset Protection Consultation
This is a brief look at asset protection planning. If you are interested in learning more, we invite you to contact our firm to schedule a free consultation. We will evaluate your unique personal situation, apprise you of your options, and make the appropriate recommendations.
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