There are complications to using a revocable living trust to protect your assets.
A revocable living trust is often used to protect assets from creditors and liability lawsuits but as Market Watch discusses in a recent article “Why your revocable trust is not protecting your assets,” it is not always that simple.
Revocable living trusts are primarily designed as estate planning tools, not as asset protection vehicles. Because the trusts can be revoked by you at any time, creditors can normally get to the assets in them. A court just needs to order you to take the assets out and pay the creditors.
Even that is an oversimplification because trusts are governed by state law. Whether a person can be forced to take assets out of a trust by a creditor varies greatly from state to state. It is often a matter of very specific language that needs to be written into the trust if you are to have any hope of protecting assets in the trust from creditors.
It is of course often possible to protect some assets from creditors with other estate planning methods. A revocable living trust, however, is normally a poor way to go about it.
If you are going to get one, do so because they are excellent estate planning tools not because they are a great way to shield assets.
An estate planning attorney can advise you on options that match your particular circumstances.
Call (443) 470-3599 today and schedule a consultation with Maryland Attorney Britt L. Stouffer to learn more about Estate or Elder Law and how she can help you.
Reference: Market Watch (Aug. 12, 2016) “Why your revocable trust is not protecting your assets”