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Trusts can protect an inheritance from creditors

Many people in Texas may not think that they need a trust. However, trusts provide many protections for a person's assets. One of those protections is from creditors.

As the economy continues to climb its way out of the recession, many people have been left with debts they may never have imagined they would have prior to the collapse of the housing market. People may still owe more on their homes than they are worth, have unplanned medical bills and even more credit card debt than they thought. Having a trust can keep creditors from coming after the assets they have inherited, which could happen if an heir is left those assets directly.

Having a trust can also keep those assets out of probate. Not only does this process take time and cost money, but it can also leave the assets vulnerable to creditors. Trusts also have the added benefit of being private. Creditors will not be able to determine what a beneficiary is receiving and how much the inheritance is worth.

If protecting an inheritance from creditors is a consideration, then it may also be a concern that the inheritance will be mismanaged if directly bequeathed. A trust can stipulate at what age a person may have full access to the assets in it. Further, if the beneficiary is not necessarily good with money, a trust can help ensure someone who is responsible with money manages the assets.

Texas residents that are putting together an estate plan may find that they can benefit from using a trust. Trusts can be tailored to an individual's circumstances and goals. It is important to note, however, that trusts have specific requirements that must be met in order for them to meet the objectives of the grantor.

Source: Fox Business, Is a Trust Right for You?, Libby Kane, Oct. 25, 2013

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