When it comes to estate planning, you may consider creating a trust to protect your hard-earned assets, as it will ensure they are transferred to your intended heirs after you’ve departed. However, not all trusts are the same. The primary difference between trusts is whether they are revocable or irrevocable. With a revocable trust, you can amend or terminate the trust after it has been created. Irrevocable trusts cannot be altered or terminated after it has been set up. That said, despite being unable to modify, amend, or terminate an irrevocable trust, significant advantages make setting this type of trust up a no-brainer. If you want to protect your assets with an irrevocable trust, contact a skilled and knowledgeable Montgomery County Trust Attorney who can help you understand the benefits of creating this type of trust. Please continue reading to learn whether an irrevocable trust can protect your assets from creditors.
What is an irrevocable trust?
Firstly, a trust is a legal arrangement where the creator (grantor) relinquishes their ownership of assets into the career of their appointed trustee for the benefit of their beneficiaries. An irrevocable trust is a type of trust that cannot be modified or terminated without the permission of the grantor’s beneficiaries after it’s been created. With this type of trust, the grantor transfers all ownership of assets into the trust for their heirs. It is critical to note that once you set up the trust, you will no longer have control over the assets. For most people, irrevocable trusts are beneficial because they minimize estate taxes and protect their hard-earned assets from creditors.
Can it protect my assets from creditors?
As mentioned above, an irrevocable trust can protect your assets from creditors. This is because once you set up this trust, you no longer legally own the assets used to fund it. Therefore you no longer control how those assets are distributed. Ultimately, this change of ownership means that creditors cannot satisfy debts owed against assets held in an irrevocable trust. However, it is imperative to note that the court can undo your transfer to a trust. This is typically when they uncover that you transferred the assets to defraud creditors. Defrauding creditors through a trust is illegal and can result in significant legal penalties. Therefore, it is crucial to work with an experienced attorney to help you protect your assets.
If you are considering creating an irrevocable trust, contact an adept Montgomery County trust attorney from the legal team at JD Katz today. Our firm is prepared to help you set up a revocable or irrevocable trust to protect your hard-earned assets.