Are Assets Held In A Trust Protected From Creditors?
Not always. Assets held in a revocable trust are not protected from creditors because you have the power to revoke the trust at any time. If, however, you give up control of your assets to a trustee who has total discretion as to how and when to distribute funds to you, your assets can typically be protected from creditors. The key is that you can have no right to demand distributions be made to you or on your behalf.
Can I Change The Terms Of My Trust?
Generally, you can change the terms if your trust is revocable. In some limited circumstances, you may also change terms of an irrevocable trust, but generally, you cannot and if you can, it is much more difficult to do so.
How Do I Properly Fund A Trust?
This can be the most tedious part of making sure that the trust functions to accomplish a person’s goals. Funding requires careful consideration of each type of asset and how to affect the transfer of title from the individual’s name to the Trustee’s name. Various types of assets have different means of transfer and the requirements can differ from state to state. For example, real estate requires a new deed to be created and filed with the appropriate registry with accompanying filing fees and various accompanying documents. In Massachusetts, a specific type of Trustee Certificate is filed to avoid filing of the Trust. If the property is a residence, a Trustee Homestead often is an accompanying document. Tangible property, like furniture, artwork, collectibles, etc. may be assigned to the trust.
Cash accounts, like savings, money market account, and checking accounts as well as brokerage accounts need to be retitled and the bank may require an entirely new account to replace the prior account or may simply allow you to retitle the account. Retirement accounts typically cannot be directly transferred, but beneficiary designations need to be correctly retitled to ensure that such assets end up where you intend. There are tax implications which need to be carefully considered when funding a trust and therefore it is good to do so with qualified assistance. We offer our clients the option of our assistance with this critical part of setting up their trusts.
And then, some people set up an unfunded trust with the understanding that it can be funded in the future should something happen to them. For example, younger people who have children but few assets, may set up a trust and obtain inexpensive term life insurance designating the trust as the beneficiary. If they were to die, the trust would be automatically funded by the life insurance, ensuring (pun intended) that their children are not left unprotected.
Will A Trust Avoid Probate?
Properly funding your trust and properly aligning your beneficiary designations is the surest way to avoid both living and death probate. Sometimes, however, there are situations where you forget to include something or you receive an inheritance or court settlement and the only way to have the funds transferred to the trust is through a probate proceeding. We do our best to assist our clients in avoiding probate, however, we also give them a “pour-over will” just in case something slips through the cracks. The pour-over will hopefully never has to be used. The purpose of it is to act as a safety net requiring that the Personal Representative “pour-over” into the trust any assets that pass outside the trust at your death.
For more information on Protecting Assets Held In Trust From Creditors, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (617) 924-0300 today.
Call Now To Uncover Your Personal Solutions