After over thirty (30) years of research concerning the Revocable Living Trust, it has been discovered and determined that the three (3) hurdles to achieving asset protection with a Revocable Living Trust have now been eliminated after the property or assets have been in the Revocable Living Trust for four (4) years for almost all states. The reason that Revocable Living Trusts were not thought to be an asset protection vehicle before was that several self-appointed so called asset protection experts were misrepresenting and misguiding the public concerning three (3) critical aspects of a Revocable
Living Trust. First, as one (1) of these so-called expert attorneys has wrongly stated, “…revocable living trusts are revocable, meaning that the creditor can simply apply for an order of the court compelling the debtor to revoke the trust and thus take the assets back, where upon the assets are then accessible to
creditors”, and also states, “If the grantor can reach the assets of the trust at any time, so can the grantor’s creditors, since the creditor can simply ask the court to order the grantor to revoke the trust.”
The U.S. Supreme Court over One Hundred (100) years ago has ruled the opposite on this legal principle. The ruling and teaching of that case, which is the supreme law of the land, basically established that the grantor’s right to revoke is not a property interest and a creditor can not attach the Grantor’s right to revoke. These legal principles have been in effect up to date with numerous courts considering those same principles and affirming them. The only rare exception is where a state legislature passes a law or code where the creditors can request that a court order a grantor to revoke the assets. Our research has revealed only two (2) cases where a court has done so. The first was an Oklahoma case where later that law or code was repealed. The second case is where an Alabama court ordered the Grantor to revoke some assets based on the Alabama code that allowed a creditor to request that the Grantor revoke the asset from his revocable trust.
The truth is that the general rule is that the Grantor’s right to revoke a revocable living trust is not a property interest, creditors can only attach a property interest, and the Grantor’s right to revoke cannot be used as a basis to attach trust assets. The rare-rare exception is only worth mentioning if you are sued in an Alabama court and the assets were transferred into a Revocable Living Trust. The creditor can only ask the court to order the grantor to revoke the trust if there is a code that allows the creditor to ask, e.g. Alabama code or statute.
Second, another issue which has discouraged persons from setting up a Revocable Living Trust is that they erroneously were led to believe that they would have to give up the control. Again, the so-called expert attorneys have wrongly stated,
“Another problem with trusts used for asset protection is that, for the trust structure to work, actual control of assets must be totally ceded from the owner of the assets to a third-party trustee”.
If the attorney is inferring that the Grantor can not be that third-party trustee for asset protection, this is a conflict with the teachings and rulings of the U.S. Supreme Court and other courts.
First, we need to clarify that there is a difference between considering this question from an income tax perspective or legal asset protection perspective. In order for a trust to be treated as a separate tax entity for IRS income tax purposes, there must be an adverse trustee other than the grantor being a trustee. But we are not considering this context here.
The U.S. Supreme Court considered the appointment of the Grantor(s) as the Trustee(s) where the legal title, control and possession of assets were transferred to the trustee to have the same legal effect as transferring the legal title control and possession to another person.
Other cases have upheld this principle where a creditor is attempting to attach assets in a trust. There are exceptions where the Grantor(s) are also the beneficiary(s) in some respect, but there is no logically reason or benefit of a Grantor becoming a beneficiary.
Third, almost all trusts by the so-called experts consider the Grantor(s) to be the Beneficiary(s) as shown by their definition of a trust. The definition refers to only one (1) arrangement or version of a revocable living trust when they state:
“A revocable living trust is simply a trust that a person sets up for her own benefit while she is alive, with the assets of the trust passing to designed beneficiaries at death”.
Another legal arrangement or version is available to avoid probate and offer asset protection when the statute of limitations runs out for the Uniform Fraudulent Transfer Act. This arrangement is where the Grantor(s) becomes the Trustee(s) for the benefit of other persons as beneficiaries during the Grantor(s) lifetime and after death. In other words, the Grantor(s) only becomes the trustee(s), not the beneficiary(s). A beneficiary has an equitable title or ownership interest in the assets of the Revocable Living Trust, therefore the creditor may be able to attack the beneficial interest owned by the beneficiary. Thus, there is asset protection for the Grantor(s) if they are not the Beneficiary(s).
A properly drafted and defended Revocable Living Trust would afford a Grantor(s)- trustee(s) after four (4) years in most states bullet-proof asset protection. The Uniform Fraudulent Transfer Act is defeated or extinguished after four (4) years. There is no other law or principle that a creditor can argue after (4) years to attack the assets in the Revocable Living Trust.
The secret is to obtain a properly planned and drafted
Revocable Living Trust and have available the research along with the
book, chapter and verse of the law to overcome the possible erroneous
attacks of creditors. We provide both to members of our private membership
association at a fair and reasonable membership fee.
Our comprehensive approach is different from other asset protection programs. We believe that you should understand and have the book, chapter and verse offering legal backup for your asset protection plan. You as a smart consumer should read the facts and always be aware of who has your best interest at hand.
For $20, you can read and listen to secrets all estate planners know and keep from the public.
I having been doing this for 23 years. I have many secrets to reveal, and they will all save you and your loved ones a ton of money.
If you order two copies of my book, I will personally
autograph both of them for you, ship them to you by priority mail, and
pay the shipping. Click
here to read more about my new book