Some information on trusts for you!
A revocable living trust offers minimal protection from creditors. While the trust itself would not be a party to the action, a creditor can generally attach the assets to secure liabilities of the beneficiaries or of the grantor/trustees during their lifetime.
That generality, however, is subject to a lot of variables. Trusts drafted with different specific provisions will afford differing levels of protection.
The "best" way to protect your assets is very complicated question and is dependent upon several additional variables, such as: what do you want to protect your assets from? what do you want to preserve the assets for? (i.e. for future use to provide for your own needs, to pass on to heirs, etc.) Is it an estate tax planning issue, a potential future crfeditor issue, future health care needs issue, and so on.
A couple of examples may help to illustrate the reason for the "it depends" answer.
An Offshore Asset Protection Trust, established in the appropriate jurisdiction may be the answer for some - it would provide a very high level of protection for the trust assets in the event of a lawsuit for which you are liable for amounts in excess of your net worth. It may be more expensive to set up than other trusts, may require a high minimum fundingf, and will likley also involve fees for the trust administration and may require a trustee in the jurisdication of the trust. Additionally, your trust assets are not readily available for your use in the event that you need them for living expenses.
An irrevocable trust, properly structured, can offer a high level of protection from creditors and health care needs issues, as well. Here again, though, the trust assets are no longer available for the use of the grantor. Once the assets are placed into the irrevocable trust, the grantor relinquishes all control, use, and benefit of the assets to the Trustee and, ultimately the named beneficiaries. As the name implies, once in place, the gtantor can not simply revoke the trust.
The more common type of trust we see in estate planning is the revocable living trust (aka living trust). The biggest benefit is that it provides for a more efficient means of passing the assets along to the intended beneficiaries at the time of the grantor's death.
Under a will, the estate must be settled through the probate court,following procedures and formalities prescribed by statute. This process exposes the estate distribution to public scrutiny, as the entire process is public record, and it involves significant delay and expense. In my jurisdiction it is roughly estimated to take 16 months and 5-8% of the estate assets in fees to complete estate settlement through probate.
With a properly drafted trust, the public record, delays and additional expense are avoided.
Bear in,mind that tax implications can insert another level of complexity to what is the best planning technique for a given situation.
I have a pretty strong opinion that this is not an area where one-size-fits-all. It would be best to contact a competent attorney practising estate planning law in your area.
