Does a Revocable Living Trust Protect Assets From Creditors?

Revocable Living Trusts

Lots of individuals wrongly think that putting their property into a revocable trust will protect those assets from creditors. This is not the situation.
  

A revocable living trust is a trust that you make in the course of your life. You fund the trust by moving legal possession of your property to the revocable trust. Even so, when you transfer ownership of your assets to the revocable trust, you do not give up any control over the assets. You continue to have the power to put assets into the trust, take away assets from the trust, and even revoke or modify the trust at anytime and for any purpose.

Since you keep significant control, you are treated as the lawful owner of the trust property. As a result, a creditor can compel you to use the trust assets to meet a lawful financial debt. So the answer is no. A revocable living trust does not protect assets from creditors.


*The above information is very general in nature and should not be considered or relied upon as legal or any other type of advice. If a reader has any legal problem immediately consult an attorney for specific legal advice. If a reader has a medical or psychological issue, immediately consult with a medical professional. See the disclaimer tab at the top of the page for more information.