Some people believe that a living trust can protect their assets from creditors. This is not true!
The property in your living trust can be reached by your creditors during your lifetime. This is because you have complete and exclusive power over the property in your trust while you are living.
On the other hand, if the property is transferred to an irrevocable trust, the legal result is completely different. Property transferred to a bona fide irrevocable trust cannot be reached by your creditors. This is because you no longer have control over property placed in an irrevocable trust.
The property in an irrevocable trust is only shielded from your creditors if it is a “bona fide” irrevocable trust. If you set up an irrevocable trust solely for the purpose of defrauding creditors, it is not a bona fide irrevocable trust.
If you have questions about living trusts, please do not hesitate to contact my office.