Trusts: Come On, Commit!

If one is beneficiary of a revocable trust, a creditor can have a lien against the property held in trust.

“§ 36C-5-505.  Creditor’s claim against settlor.

(a)        Subject to the other applicable law, whether or not the terms of a trust contain a spendthrift provision or the interest in the trust is a discretionary trust interest as defined in G.S. 36C-504(a)(2) or a protective trust interest as defined in G.S. 36C-5-508, the following rules apply:

(1)        During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor’s creditors.”

Creating an irrevocable trust makes another level of separation between the property and the beneficiary; less control in a sense, because the ability to take back the property is gone (it will go to the named beneficiaries upon death of settlor/trustor/grantor),  but this trust protects the property more completely, and can be made unreachable by any creditor.

Advertisements

What are your thoughts?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s