Does a Revocable Living Trust Protect Assets From Creditors?

Many people mistakenly believe that putting their assets into a revocable trust will shelter those assets from creditors. This is not the case.

A revocable living trust is a trust that you create during your lifetime. You fund the trust by transferring legal ownership of your property to the revocable trust. However, when you transfer ownership of your assets to the revocable trust, you don’t relinquish any control over them. You still have the power to add assets to the trust, remove assets from the trust, and even revoke or amend the trust at any time and for any reason.

Because you retain so much control, you are treated as their legal owner trust assets. Consequently, a creditor can force you to use the trust assets to satisfy a legal debt.


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