You may have heard a lot about how a trust can be used to protect assets. It is true that a trust can protect the assets held by the trust; however, it must be the right type of trustand the trust agreement must be properly drafted. Trusts are broadly divided into testamentary and living trusts. Testamentary trusts do not activate until the death of the Settlor whereas a living trust activates when all elements of formation are complete. Living trust can be further sub-divided into revocable and irrevocable living trust. A revocable trust can be modified or revoked by the Settlor without the need to provide a reason whereas an irrevocable living trust cannot be modified or revoked by the Settlor. Because both a testamentary and a revocable living trust can be modified or terminated by the Settlor, the assets held in those trust are not protected from creditors and other threats. Assets transferred into an irrevocable living trust, however, become property of the trust, out of reach of the Settlor, and are
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