How does a trust protect your assets? Is there a specific type of trust that you want?
At its core, a trust is a separate legal entity with a set of legal rights, much like a person. A trust can typically own, purchase, sell, manage, and trade property. When you transfer property into a trust, you no longer own the property, but you or your beneficiaries may access or use the property under the terms of the document that created the trust. Because you don’t own the property, your creditors typically cannot file a claim against the assets in the trust to satisfy a judgment against you.
Trusts are categorized as either revocable or irrevocable. A revocable trust, as the term suggests, can be changed or terminated by the grantor (person creating the trust) during their lifetime, meaning the grantor has the option of taking back the assets placed in the trust. An irrevocable trust, once executed, may not be amended or terminated without the approval of either the trust beneficiaries or a court.
If you plan to use a trust to protect your assets, you must create an irrevocable trust for the benefit of others, such as your children or grandchildren. The trust must be managed by a third-party independent trustee, not by you. Courts will typically not allow you to shield assets from creditors by using a revocable trust or an irrevocable trust where you retain significant control over the assets in the trust.
At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to individuals throughout southeast Texas, handling all matters related to asset protection and trust creation. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.