Interviewer: Whitney, what are the common myths out there about revocable living trusts?
Whitney: The biggest myth that we run into with our clients, is that people believe that their revocable living trust is protecting their assets. When you have a revocable living trust it is not providing you any asset protection. Your creditors don’t care that you have your money in a revocable living trust.
They can still go into that trust and get any money if you are being sued, because you were in an accident and it was your fault or if you are filling for bankruptcy. When the trust starts providing asset protection is when the trust makers, or the trustors pass away and at that next generation, is when the asset protection kicks in.
But while you as the trust maker are alive, you are not provided with any asset protection in your revocable living trust.