Revocable Trusts Don’t Provide Asset Protection

This is yet another story of dangerous misinformation on estate planning. Someone emailed me asking whether revocable trusts can provide asset protection. While revocable trusts can, if properly done, provide lots of protection, asset protection is not really one of them. Because you, the settlor, grantor, trustor or in English the one who set up the trust, can revoke (terminate) the trust at any time you cannot use the trust to deflect a challenge from a creditor or other claimant. If that is what you want to do use an irrevocable trust, one that cannot be revoked or changed. A suggestion was made online that if you have a revocable trust that names contingent beneficiaries (people who can benefit from the trust other than you, e.g., after you die) that that would provide protection. Unfortunately, not so. If you can revoke the trust in your discretion, it cannot be protective.