If you are worried about creditors coming after your assets, establishing a trust can help. To be more specific, forming an irrevocable trust might be the best path forward for you. A Fayetteville, Arkansas trusts lawyer from our firm can help you take care of this and prevent creditors from going after your assets.
How Does an Irrevocable Trust Keep My Assets Safe?
When you put your assets in an irrevocable trust, they are no longer in your control. Instead a trustee, someone that you assigned to be in charge of your trust, now has control over your assets. They are meant to use this power to distribute your assets to your friends and family.
Because you no longer have control over these assets, creditors cannot come after them. They can say that you owe them money, but a trust that is properly set up has no obligation to pay those debts. The debts are yours, but the assets no longer are.
Can I Use a Different Type of Trust?
There are different types of trust, but the irrevocable trust is the best one to use in this kind of scenario. Being irrevocable means that you cannot change it. Once it is set up, the terms are outlined and there is nothing that you can do to adjust the arrangement.
Other trusts do offer you the opportunity to change their terms if you wish to. A revocable trust will allow you to change its terms multiple times. Since you are able to change the rules of your trust, your creditors can argue that your assets are still within your possession. If you can still access those assets, you should be able to pay off your creditors.
Do I Need a Lawyer to Set Up an Irrevocable Trust?
Having a lawyer set up your irrevocable trust is a wise idea. Estate planning can be a more complicated task than most realize, and you want to be sure that any agreement that is drawn up is actually legally binding. Otherwise, your trust could end up offering you no protection at all.
Can Courts Compel Me to Pay Creditors Out of an Irrevocable Trust?
You have an irrevocable trust and now you believe that there is nothing that creditors can do to get to you. They do have one option. They can try to take you to court and get the trust changed.
A judge will look at the matter and could decide to let the creditor take what they are owed. However, this would require the court to think that you only made a transfer of assets into an irrevocable trust with the express purpose of defrauding your creditors.
Meet With Our Lawyers Today
When you are ready to learn more about your options, contact the Knapp Law Firm. You are never too young to begin the estate planning process, so let us help you protect the assets that you want to pass down.
