Navigating the world of estate planning may take time, and many people wonder if creating a trust can protect their assets from litigation. This blog post explores whether a trust can shield your assets from legal claims.
Types of Trusts and Their Functions
Before we get into the specifics, it’s essential to understand that there are various types of trusts, and whether they safeguard your assets against lawsuits depends on the trust you establish.
The most prevalent sort of trust is the living trust. This trust serves mainly as an estate planning tool.
Rather than offering liability protection, a living trust is intended to make the distribution of your assets more accessible and more efficient for your loved ones after your death.
Living Trusts and Liability Protection
So, if you establish a living trust, are your assets protected against lawsuits? The answer is absolutely “no.”
A living trust is not protected from legal claims or judgments against the trustor. Instead, its primary goal is to help avoid the probate procedure, so your family does not have to go to court to retrieve your assets.
If a lawsuit is filed against you and a judgment is rendered, your assets maintained in a living trust remain exposed and can be recovered by creditors or litigants.
Trusts with Liability Protection
While a living trust will not safeguard your assets from lawsuits, other trusts may provide more liability protections.
These are generally utilized by wealthy persons or professionals who are more likely to be sued. For example, an “asset protection trust” can provide some protection from creditors and legal claims.
While a living trust has many advantages for estate planning and probate avoidance, it does not shield your assets from lawsuits. Different trusts serve different objectives, and deciding which is best depends on your circumstances.
Feel free to seek professional help and recommendations targeted to your specific circumstances.
For more insights and expert advice, call Ocampo Wiseman Law to schedule your complimentary consultation.
