In fact, this is not entirely true. In the field of estate planning, there are different types of trusts that can be utilized to satisfy various respective objectives. One major difference between the types of trusts is the power of revocation.
There are trusts that are revocable, and there are also irrevocable trusts that you cannot rescind or dissolve.
The revocable living trust is a very popular estate planning tool among people who have relatively simple and straightforward aims. You can act as the trustee and the beneficiary while you are alive and well if you establish a revocable living trust, so there is no loss of control on that level, and you can revoke the trust entirely if you ever choose to do so.
In a legal sense, you are retaining incidents of ownership when you establish a revocable living trust, because you have total control of the assets that you have conveyed into the trust. Because you retain incidents of ownership, the assets in the living trust would not be protected if you were to become the target of a lawsuit.
These trusts do not provide asset protection, but they do provide other benefits. With a revocable living trust, you do not have to allow for lump-sum distributions to the beneficiaries after your passing. You could have a trustee manage the trust, and you could include spendthrift protections.
Distributions to the beneficiaries would not be subject to the probate process, and this is another positive. Probate is a time-consuming process, and it would enter the picture if you use a last will as your primary asset transfer vehicle.
Asset Protection Trusts
If you want to protect assets, you could convey resources into an irrevocable asset protection trust. Since you would not be able to revoke the trust, you would be surrendering incidents of ownership, so the assets would be protected.
You can use a trust to protect assets for your own purposes, but you could also establish a trust that would protect assets that you are leaving to a loved one.
Aside from trusts, there are other legal structures that provide asset protection. Family limited partnerships and limited liability companies are often used by business people who want to protect assets.
Schedule a Consultation
Our firm would be glad to help if you would like to discuss asset protection with a licensed professional. We offer free consultations, and you can send us a message through the following link to set up an appointment: Essex Junction VT Estate Planning Attorneys.