Video Summary
Will my assets be protected from creditor’s claims if I place my assets in a trust? The answer is no. This is a myth. I often hear this, from time to time whenever I’m doing estate planning, or people call about setting up a trust and that your assets are not protected. The only exception of this, is if you set up an irrevocable trust, meaning you can’t change it and you can’t have any control of your assets, and irrevocable mean you can’t change it. So, I rarely if ever, draft an irrevocable trust, except if it had to do with a life insurance trust and those may be irrevocable. As far as insurance policies are concerned, in this vein, if you are married, you have certain protections. If you hold your assets as husband and wife, this is called tenancy by the entireties, and you can set your bank accounts up with 10 under tenancy by the entireties, or simply if you hold your assets as husband and wife, it creates tenancy by the entireties. And this gives you some asset protection so that if your spouse, if they get a judgment against your spouse and not against both of you, then they cannot attach any assets that you own jointly as husband and wife or tenancy by the entireties. This is different than joint tenants with right of survivorship. If you own it as joint tenants with right of survivorship, then each of you own a one-half interest and the asset half the asset is not protected. If they get a judgment against one of you, they can attach that asset. So, this is a myth and I don’t draft irrevocable trust. Also, as if you do set up a joint trust, as far as husband and wife is concerned, you destroy the tenancy by the entireties that you possibly had before you set it up and, and may subject your, the assets in the trust, your spouse owned or you owned to your creditor’s claim. So don’t set up a trust to try and protect your assets. If you have any questions, give me a call at (727) 847-2288.