Creating a trust can be one of the most important steps of creating a comprehensive estate plan. Trusts are used to protect certain assets, but does this mean a trust can protect certain assets from bankruptcy? Continue reading to learn the answer to this question and more. If you have any further questions or concerns about creating trust, it is important that you reach out to our experienced estate planning attorney to retain the legal guidance you require to make the best decision for you, your future, and your loved ones. Give our firm a call today to learn more about our services and how we can assist you.
Can creating a trust protect certain assets from bankruptcy?
Trusts are often used to protect certain assets from future legal troubles and for preserving assets for beneficiaries. However, assets in certain trusts may not be exempt from various collect activities if you or one of your beneficiaries has incurred debt and is filing for bankruptcy.
There are two main types of trusts, revocable and irrevocable trusts. A revocable trust allows individuals to have control of the assets they have placed into a trust until they pass. Following their passing, the assets will then be transferred to the beneficiaries named in the trust. An irrevocable trust allows the beneficiaries to own the assets once the trust has been created. You can add a spendthrift provision to your irrevocable trust in certain cases which will protect it from credit seizure, should the beneficiary file for bankruptcy.
What are the benefits of creating a trust?
There are benefits to both types of trusts. The main benefits of creating an irrevocable trust in your estate plan are as follows:
- They offer estate tax reductions
- Charitable estate planning
- Protect and preserves your assets
Creating a revocable trust in your estate plan can offer the following benefits:
- Protects your privacy until you pass away
- Helps your family avoid the probate process upon your passing
- Helps you financially plan for mental incapacitation
If you have any further questions regarding trusts and the best route for you to take when drafting an estate plan, give our experienced estate planning attorney a call today. We would be happy to walk you through the estate planning process with your best interests in mind. We are prepared to assist you when you are ready.
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