Can an Irrevocable Trust Protect My Assets from Creditors?

When the day comes that you are no longer around, you may have every intention of having your assets transferred to your loved ones. But at the same time, you may run the risk of having your money and other property collected by your creditors instead. This is when an irrevocable trust may be deemed vital. Follow along to find out whether an irrevocable trust can protect your assets from your creditors and how one of the proficient Butler County trust attorneys at Heritage Elder Law & Estate Planning, LLC help ensure this.

What is an irrevocable trust?

First of all, a trust is considered a legal arrangement in which you (i.e., the grantor) transfer the ownership of your assets to a trusted individual (i.e., the trustee) so that they may administer them to your loved ones (i.e., the beneficiaries) at a specified point in time.

And more specifically, an irrevocable trust is considered a legal arrangement in which you no longer legally own the assets you used to fund it, and therefore can no longer control how those assets are distributed. Instead, this trust has you assign who has authority over your assets if you are incapacitated or deceased, along with the timing in which they can distribute them. But once you establish this agreement, you relinquish your ability to modify, amend, or terminate its terms later on.

This is the opposite of a revocable trust, as this type of trust can be modified, amended, or terminated at any point during your lifetime. With this, you may maintain ownership over your assets.

How can an irrevocable trust protect my assets from creditors?

Commonly, irrevocable trusts are utilized to protect assets from the government, from being lost to long-term care, and most importantly, from creditors. This is because, to reiterate, you have transferred all your ownership over the assets you placed in your irrevocable trust. And so, since these assets no longer legally belong to you, a future creditor cannot satisfy a judgment against you to terminate the trust and surrender its assets. Notably, this is effective the day after you put your money and other property into this trust.

You must understand that an irrevocable trust can only protect your assets from your creditors so long as the court does not believe that you had an intention to defraud your creditors. In other words, you cannot establish this trust as a direct response to being the subject of any liability.

There is no time like the present to get your estate plan in order. So pick up the phone and call one of the talented Butler County estate planning & probate attorneys from Heritage Elder Law & Estate Planning, LLC today. We are looking forward to it.