A revocable trust is a type of asset protection trust that can be used to protect your assets in the event of divorce. This type of trust is also known as an “irrevocable trust” or a “self-settled trust.” While this type of trust can be used to protect your assets from creditors, it cannot shield your assets from the divorce process.
In order to understand how a revocable trust works, it is important first to understand what a trust is. A trust is an arrangement where one person (the trustee) holds legal title to the property for the benefit of another person (the beneficiary). The trustee has a fiduciary duty to manage the trust property for the benefit of the beneficiary.
A revocable trust can be revoked or amended by the grantor at any time. This means that the grantor has complete control over the trust property. When the grantor dies, the revocable trust becomes irrevocable, and the successor trustee takes over.
An irrevocable trust cannot be revoked or amended by the grantor. This means that once you create an irrevocable trust, you no longer have any control over the trust property.
The reason why a revocable trust cannot shield your assets from divorce is that it is revocable. This means that your spouse can petition the court to have the trust’s assets included in the marital estate.
If you want asset protection from divorce, you need to create an irrevocable trust. This type of trust cannot be revoked or amended by you, which means that your spouse will not be able to petition the court to include the trust’s assets in the marital estate.
There are several types of irrevocable trusts that can be used for asset protection from divorce. Some of these include:
Irrevocable Life Insurance Trusts
An irrevocable life insurance trust (ILIT) is a type of trust that owns a life insurance policy. The death benefit from the policy will not be included in your spouse’s estate, which means that your spouse will not be able to use it to pay for divorce-related expenses.
Qualified Personal Residence Trusts
A qualified personal residence trust (QPRT) is a type of trust that owns your primary residence. You can transfer your residence to the trust, but you must continue to live in it for a certain period of time. When the trust expires, the property will not be included in your estate.
Asset Protection Trusts
An asset protection trust (APT) is a type of trust that is designed to protect your assets from creditors. This type of trust can also be used to protect your assets from divorce.
Each type of trust has its own rules and regulations. If you are considering using a trust to protect your assets from divorce, it is important to consult with an experienced trust and estate planning attorney.
When it comes to protecting our assets, we want to make sure that we are doing everything in our power to safeguard them for the future. While a revocable trust may seem like a good option, if you are looking for asset protection from divorce, an irrevocable trust is a better choice. There are several types of irrevocable trusts that can be used for this purpose, so speak with an experienced estate planning attorney today to find out which one is right for you.