One of the common questions that we hear from our clients when discussing estate planning is whether this trust protects their home and assets from liability in the event they are sued or pursued by a creditor? Well, the answer to this question is no. A revocable living trust does not have any asset protection for the individual or individuals that establish the revocable living trust. However, there are certain asset protection strategies that you can implement in your trust to protect your assets from future creditors, divorce, bankruptcy, etc. We will address those questions in later blog articles.
However, your revocable living trust can be used to protect your children’s inheritance from divorce and future creditors. Although, it is true, that a trust can be used, and commonly is used, to provide for the care of minor children and their assets in the event that you and your spouse both die with minor children, a trust can also be used to prevent your adult children from losing their inheritance to creditors, divorce, or squandering their inheritance.
By establishing a trust, and using the appropriate instructions and language in the trust, you may be able to protect your children’s inheritance from future creditors, divorce, and lawsuits. However, it is important that you discuss these matters, concerns, and goals with an estate planning lawyer so that you ensure that your revocable living trust meets your goals of providing asset protection of your children’s inheritance.
If this sounds like you and you have questions regarding the protection of your children’s inheritance from divorce and future creditors, I encourage you to attend one of our many free events that we hold each month throughout the greater Nashville area. I am assured that most, if not all, of your estate planning questions will be answered.