How can a trust be used to protect my assets?
By far, one of the most popular asset protection planning tools is a trust; however, it must be the right type of trust and the trust agreement must be properly drafted. Trusts are broadly divided into testamentary and living trusts. Testamentary trusts do not activate until the death of the Settlor whereas a living trust activates when all elements of formation are complete. Living trusts can be further sub-divided into revocable and irrevocable living trusts. A revocable trust can be modified or revoked by the Settlor without the need to provide a reason whereas an irrevocable living trust cannot be modified or revoked by the Settlor. Because both a testamentary and a revocable living trust can be modified or terminated by the Settlor, the assets held in the trust are not protected from creditors and other threats. Assets transferred into an irrevocable living trust, however, become the property of the trust, out of reach of the Settlor, and are protected.