A revocable living trust does not protect your assets from lawsuits. Living trusts are revocable, meaning you remain in control of the assets and you are the legal owner until your death. Because you legally still own these assets, someone who wins a verdict against you can likely gain access to these assets.
An irrevocable trust, on the other hand, can provide a degree of asset protection from lawsuits. Irrevocable trusts are trusts that cannot be changed or revoked once they are created. When you transfer assets into an irrevocable trust, you are giving up ownership of those assets. This means that your creditors cannot go after the assets in the trust to satisfy your debts.
However, it is important to note that asset protection trusts are not a foolproof way to protect your assets from lawsuits. There are a number of factors that can affect whether or not an asset protection trust is successful, including the laws of the state where the trust is created and the specific facts of the case.
If you are considering creating an asset protection trust, it is important to speak with an experienced estate planning attorney to discuss your specific needs.
California does not authorize the creation of Domestic Asset Protection Trusts (DAPTs), which are a common vehicle for asset protection.
Here are some other things to keep in mind about asset protection trusts:
- Asset protection trusts must be properly drafted and administered in order to be effective.
- Asset protection trusts can be complex and expensive to create and maintain.
- Asset protection trusts may not protect you from all types of lawsuits, such as fraud or intentional wrongdoing.
If you are concerned about protecting your assets from lawsuits, you should speak with an experienced estate planning attorney to discuss your options.
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