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Estate Planning >> Trusts & Living Trusts >> auto debt in a trust

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Event: auto debt in a trust+

#361, posted 23 Sep 2021 11:35 am192 words
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Joined 26 Jan 2022 1:01 pm

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Re: Terry's question

Dear Terry:

You probably wanted to ask whether a Grantor, if he is also a Trustee under a Revocable Living Trust, is liable for the debts of the trust.

It needs to be said that the assets of a Revocable Living Trust are not protected from the grantor’s creditors during the grantor’s lifetime or after the grantor’s death.

After death of the Grantor (Settlor of the trust) the Living Trust becomes irrevocable.
To protect beneficiaries of the trust, many states adopted “spendthrift provision” to the trusts. Spendthrift provision does not allow beneficiary’s creditors to reach the beneficiary’s interest in a spendthrift trust. On the other hand, if the beneficiary has the power to withdraw trust principal, for example at a specific age, those assets could be subject to creditor claims when the specified age is reached, absent other specific provisions of the trust which could permit a trustee to defer or delay asset distribution.

Please be advised that Legal Helpmate is not a law firm and we do not give legal advice to the public. All written above is given for your general information only.

Best regards,

Customer Support

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