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Julie Garber

Will Your Revocable Trust Protect Your Assets Against Lawsuits?

By February 11, 2011

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This is a common misconception about revocable trusts - that once you transfer your assets into the name of your trust, they will be protected if you get sued. Absolutely not true. Your revocable trust is simply a mirror image of you - after all, you are the creator of the trust, the beneficiary of the trust, and the trustee of the trust, and you've transferred ownership of your assets into the trust, so how could they possibly be protected from anything?

A revocable trust serves three general purposes:

  1. A revocable trust can be used as part of a comprehensive disability plan in case you become mentally incapacitated.
  2. A revocable trust can be used to avoid probate.
  3. By avoiding probate, a revocable trust will keep all of the details about who is getting what and how they'll get it a private family matter after you die.

That's it.

Not too fancy, is it? If you're interested in protecting your assets against lawsuits, then you'll need to create more than a revocable trust - you'll need to create an asset protection plan.

Comments
January 10, 2014 at 12:42 pm
(1) Louis says:

I understand that if the settlor is sued then the creditor can go after the revocable trust, if it has assets in it; however, if the creditor sues the revocable trust and not the trustee/settlor and if the creditor gets a judgment against the revocable trust, can the creditor collect against the personal assets of the trustee (if there are no funds in the revocable trust)?

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