If you have assets to pass down to your children and family members, you probably want to make sure that said assets actually go to your loved ones. You do not want creditors trying to pick over everything before everyone else. A trust, or more specifically an irrevocable trust, can protect you from creditors. A Woodland Hills trust attorney can help you establish one.
How Does an Irrevocable Trust Work?
When you establish an irrevocable trust, you are placing all of your assets and money into it. Then you are granting control over the trust to someone else, often referred to as a trustee. Then your assets can eventually be transferred to the people who you want to pass them down to. These are your beneficiaries.
When there is a trust established, you are no longer the legal owner of the assets in that trust. So when creditors come after you, they cannot take those assets. They are not yours, and so the creditors cannot collect if you owe them a debt. At least, this is true if you choose to establish an irrevocable trust.
What is the Difference Between an Irrevocable Trust and a Revocable Trust?
Revocable and irrevocable trusts have one key difference between them. An irrevocable trust cannot be modified ever. You have made the trust agreement, and everything is in the hands of your trustee and your beneficiaries. A revocable trust can be changed though. This can be good for people who want some flexibility, but if you are trying to keep creditors from pillaging the assets you have left, this trust arrangement is not as useful.
Since a revocable trust can be changed by you, you are still technically in control of these assets. So you can be compelled to change the terms of your trust and allow creditors to collect.
Can Creditors Still Try to Come After Assets in an Irrevocable Trust?
Sometimes, creditors can still try to come after the assets you have placed in an irrevocable trust. This would likely involve a court battle, and the court would have to determine that you transferred assets to a trust with the intention to defraud creditors and keep them from collecting on debts.
This is why it is important to begin planning your estate and methods of protecting your assets early on. Waiting too long can put you in a vulnerable position and make some moves look like attempts at fraud.
Schedule a Consultation Today
It is always best to start the estate planning process early, so schedule your consultation with our law firm today. No matter your age or level of wealth, the experienced attorneys here at the Law Offices of Yacoba Ann Feldman are ready to help you establish an estate plan of your own. We look forward to helping you.
