Residents in Oakland County who are involved in estate planning may be wondering if living trusts offer any kind of asset protection.
The answer is yes and no. If an owner of assets controls or benefits from the trust in any way, then the living trust offers no asset protection. In most living trusts, the owner of assets has the power to serve as or appoint a trustee. That means the owner can change the conditions of the trust and withdraw trust assets. For Michigan residents who are currently engaged in estate planning, these powers can help prevent the estate from going into probate. However, if an owner has these powers, then the trust assets are not protected from creditors.
Yet it is still possible for an original owner to minimize future estate taxes or gain asset protection, but he or she must choose not to control or otherwise benefit from a trust. Most original owners, however, prefer to keep a tighter control over trust assets.
While an original owner is usually not afforded asset protection by a living trust, such a trust can provide asset protection for future beneficiaries. In matters related to bankruptcy and divorce, a trust can offer superb asset protection, and a well-written trust can do much to protect a beneficiary’s due assets from creditors.
Oakland County residents with questions about trusts or other end-of-life documents would likely benefit from consulting with a legal professional who is experienced in such matters. An estate planning attorney can help to ensure the protection of assets, as well as avoid the costs of probate for future beneficiaries.
Source: Florida Today, “Trusts can offer asset protection,” Harry Jones, Jan. 8, 2012