Want to Protect Your Assets From Creditors?
Do you have property and assets that you want to protect from collections? Estate planning is one of the most important things you can do to secure your assets, and a living trust is one of the tools at your disposal. Though there are two types of living trusts, only one protects your assets from collection. Read on to learn more about your options.
What Is a Living Trust?
A living trust is an account that you create and manage while you are alive, and then it transfers to your beneficiaries upon your death. Some common assets that you can put into a trust are:
- Savings accounts
- Life insurance
- Intellectual property
How Are Revocable and Irrevocable Living Trusts Different?
Living trusts fall under two categories: revocable and irrevocable. An irrevocable trust means that you cannot make any changes once the property belongs to the account. You can not remove the property, change beneficiaries, or make adjustments to distributions. When your assets are appointed to the trust, you give up ownership of all the property.
In contrast, you can change a revocable living trust at any time. You have complete control over your property. This type of account is an excellent option if your family is still growing, if you are still building your wealth, or if you believe you may need access to your property in the future.
When Should You Set Up an Irrevocable Trust?
When you have a large amount of property, there are certain times that an irrevocable trust is your best option to protect those assets. For example:
- Suppose you want to prevent future debt collection against your assets. In that case, an irrevocable trust is a good idea because your property no longer belongs to you and therefore cannot be used to pay off your debts, including foreclosures, catastrophic medical bills, and past-due taxes.
- Irrevocable trusts also protect against lawsuits by individuals or businesses. This means you don’t need to carry additional insurance safeguarding this type of property because the trust makes it inaccessible.
- To protect you against the need to pay a portion of your taxes, items in the trust are exempt from certain types of taxes because the property doesn’t belong to you.
If you are ready to protect some of your assets with an irrevocable living trust, you can reach out to Klenk Law estate attorney right away. They can answer your questions and guide you through the decision-making process.