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:
- A revocable trust can be used as part of a comprehensive disability plan in case you become mentally incapacitated.
- A revocable trust can be used to avoid probate.
- 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.
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.