Will my trust protect my money from lawsuits and creditors - Estate Planning/Asset Protection

Will my trust protect my money from creditors and lawsuits?



This is a very common concern. Most folks know that it is possible to put money inside of a trust and have it sheltered from creditors, lawsuits, and divorce. This is only possible if the trust is drafted with a spendthrift clause.

This clause basically just says that the trustee can't be compelled to provide any distribution that would end up in the hands of creditors. It is that simple. However, there are some technical requirements. It doesn't work for self settled trusts.

This is a trust that you make and are also a beneficiary of. So, your revocable living trust normally won't protect your money from your creditors. It can protect your money from the creditors of your beneficiaries once you are gone though.

Some states will even protect your money in a self settled trust. Minnesota is just not one of them.

A well drafted trust should provide this kind of protection.


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