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Living trusts protect assets for beneficiaries, not owners

A living trust can be a good way of protecting one's assets, but only under certain specific conditions. It is important to note that as long as the owner maintains power over the trust and benefits from it, the trust will be subjected to estate taxes. The owner's creditors can also attach the trust assets.

This is the case with most living trusts not only here in Florida, but elsewhere. The owner generally maintains the power of appointing a trustee or holds the rights to make changes or amendments to the trust. Furthermore, the owner is able to access the trust's assets and withdraw them any time he or she would like. Under such arrangement, a living trust can be a logical choice for estate planning as it ushers assets away from the reaches of probate court, but as long as the owner holds on to these powers, the trust is not much of a protection for his or her assets.

When the owner of the living trust chooses to relinquish these powers that is when a living trust can be true protection for assets, along with making those assets immune from future estate taxes.

Many owners do not opt to go this route. While a living trust is not an adequate protection for their assets, it does protect the assets of the trust's beneficiaries, which is the main goal.

A carefully crafted trust can make these assets protected from things like divorce or bankruptcy for the trust's beneficiaries. It is paramount that owners of a trust seek professional help so that the creditors of beneficiaries do not challenge the legality of the trust.

Source: FloridaToday.com, "Trusts can offer asset protection," Harry Jones, Jan. 8, 2012

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