Can an Irrevocable Trust Protect My Assets if I Am Sued?

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Upon your unfortunate passing, you likely hope that your loved ones can inherit the assets that you promised them. But their inheritances may be threatened if you face an unexpected civil lawsuit at one point in your lifetime. However, you may rest assured knowing that your estate planning tools may work to protect you and your loved ones in a situation such as this. Follow along to find out how an irrevocable trust might protect your assets if you ever get sued and how a proficient Putnam County trusts attorney at The Law Office of Andres D. Gil, PLLC can help you create one.

If I am sued in a civil lawsuit, can an irrevocable trust protect my assets?

Initially, you may set up an irrevocable trust to reap estate tax benefits. However, you may profit from its other fringe benefits, such as its protecting of your assets in the event of a civil lawsuit. This is because, with this type of trust, you are removing all incidents of ownership. This means that a plaintiff cannot collect their compensatory damages from the assets you have set aside in this trust, since you technically do not legally hold ownership rights over them. Further, this means that your designated beneficiaries are still entitled to receive the full amount of assets you left for them when the time comes.

An irrevocable trust is especially beneficial to create if you work in a profession that is vulnerable to lawsuits, such as if you are a doctor or an attorney. Similarly, this type of trust also protects your given assets from being collected by creditors in the event of a bankruptcy filing. It is worth mentioning that the same benefits do not apply to a revocable trust.

What are the different types of irrevocable trusts that I can choose from?

The assets that you may put away in your irrevocable trust may range between your business, your investment assets, your cash, and your life insurance policies, among other things. Therefore, there are different types of irrevocable trust that you may choose from, so to align with your unique financial situation. A few examples are as follows:

  • An irrevocable life insurance trust is best if you wish to transfer your benefits to your designated beneficiaries outside of your taxable estate.
  • A qualified personal residence trust is best if you wish to transfer your residence out of your estate and to your designated beneficiary at a low gift tax value.
  • A charitable remainder annuity trust is best if you wish your designated beneficiaries to receive long-term income from the trust and have the remaining assets donated to certain charities upon their passing.

You must not take any chances when it comes to establishing your irrevocable trust and your overall estate plan. So please retain the services of a talented Putnam County estate planning attorney from The Law Offices of Andres D. Gil, PLLC as soon as you can.

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