Cover Your Assets!
Happy St. Patrick's Day from a quarter-irish attorney!
I'm often asked whether a revocable trust will protect a client's assets from creditors. Many people think it does but they are mistaken.
A revocable living trust, which is the type of trust most of us think of and refer to when we ask that question, is not designed to shield property from the tentacles of creditors. The main issue is control. If you still control the property that is transferred to the trust then the law says you can just as easily transfer the property out and pay off your debt.
So how can you shield your property from creditors? Well, make sure it is not "yours" anymore. In the old days this meant transferring the property to an irrevocable trust that you could no longer control or really even enjoy.
In the last few years, Utah and other states have created a type of trust called a "Domestic Asset Protection Trust" (DAPT). There are a lot of requirements for establishing and maintaining a DAPT in order to provide a creditor shield. Nonetheless, if you follow those rules as statutorily outlined, the property you transfer to the DAPT can be protected from creditors and others.
Be cautious. A DAPT is complicated and professional assistance is highly recommended!