Me, My Trust, and Liability...

What is the name of your state - Trust formed under California Law

I once heard someone say that having a trust is like inventing a "cousin" who holds your property for you. Since you've given your property to your cousin (trust), then you no longer "own" the assets included in the trust. I also heard a story that went something like this:

A maid worked for a rich family (probably Rockefeller), and got bitten by their dog. The maid hauled the family into court expecting to land a windfall settlement or judgement. When it was time for the judge to rule on the case, he said, "Um...the Rockefellers don't own anything...er...ah...well, you can have their dog..." The whole point was that the Rockefellers (or whomever it was) put all their possessions in trust, and as a result, their liability was limited to only what they owned - their dog.

So my question is, does placing all my assets into a trust REALLY protect me from someone who wants to sue the pants off of me? Or, are there ways to file a lawsuit against me and somehow get to the trust? Or, file a lawsuit AGAINST THE TRUST?

Thanks in advance for any help you can provide

Maitai

It depends. But, at the end of the day, even if they can't get to the underlying assets in the trust, they can get to anything you have a right to get.

Do some google internet searching, and look at the difference between a 'revocable' trust, and an 'irrevocable' trust.

If you do an 'irrevocable' trust, you have given the money away and it is controlled by somebody else, and has it's own tax-id.

for the most part, this is a big misconception with the masses. a trust does not protect the assets, while the trust is revocable.

the main purpose of a trust is to have instructions on how to manage the assets of the trustor, when the trustor is alive and no longer able to manage them - and of course, how to manage/distribute the assets when the trustor dies, without dictates from the probate system.

i am pretty sure that for a trust to be irrevocable, the trustor can not be the trustee, nor the beneficiary. in other words, the trustor can not control/manage or reap the benefits from the assets in an irrevocable trust.

and i am also pretty sure that most states have some sort of lookback policy. if you get sued, and then place assets into an irrevocable trust - i dont think that would fly with most judges in most states.

and no matter what, a lawsuit can always be filed against a particular asset, most notably real property. this is why i would always keep each individual real property in its own separate trust, so that no other assets can be attached, along with it.

trusts are wonderful creatures, but they arent magic elixirs.

Guys,

Thanks a lot, I really appreciate the help!

Maitai