You must figure out how to distribute your assets to your loved ones in the unfortunate event that you pass on. With this, likely the last thing you wish is for your assets to end up in the hands of your creditors instead. This is one of the many reasons why establishing a valid and enforceable trust is so critical. Follow along to find out how an irrevocable trust can protect your assets from creditors and how a proficient Putnam County trust attorney from The Law Offices of Andres D. Gil, PLLC can assist you in creating one.
How can an irrevocable trust protect my assets from creditors?
Before all else, an irrevocable trust is intended to transfer your right to your assets onto your designated beneficiaries straightaway. This transfer of rights may be handled by an individual whom you trust, otherwise known as a trustee.
Notably, this is distinctive from the purpose of a revocable trust, which is to allow you to maintain control over your assets until the time that you pass away. This may be more desirable to you if you prefer to modify its terms and conditions throughout your lifetime.
So, in other words, an irrevocable trust relinquishes your legal ownership over the assets you used to fund it and your legal right to control how these assets are to be distributed. This further means that a future creditor may be barred from satisfying a judgment against the assets held in this type of trust.
This protection is effective so long as a future creditor is unable to prove to the court that you transferred the ownership of your assets with the intention of defrauding them. Therefore, you must not create your irrevocable trust in anticipation of being the subject of any liability. Rather, you must establish it for the purpose of ensuring that your beneficiaries are financially protected when you are no longer around.
Can an irrevocable trust protect me in a bankruptcy filing?
In addition to offering protection from creditors, an irrevocable trust may become pivotal if one of your beneficiaries ever finds themselves in a financial situation that calls for a bankruptcy filing. This is so long as you incorporate a spendthrift provision within the trust. This is because a spendthrift provision is a clause that limits the assets that can be reached by your beneficiary’s creditors. In other words, it may guard against a credit seizure if one of your beneficiaries must file for bankruptcy.
With all things considered, there is no time like the present to get your estate plan in order. So pick up the phone and call a talented Putnam County estate planning attorney from The Law Office of Andres D. Gil, PLLC today. We are looking forward to it.