In the complex world of asset protection, trusts often serve as a linchpin, especially when it comes to shielding wealth from potential creditors. This principle holds true in the state of Missouri, where numerous forms of trusts are legally recognized and serve as effective tools for protecting assets.

A trust, in essence, is a legal arrangement where one party (the settlor) places assets under the control of another party (the trustee) for the benefit of a third party (the beneficiary). In the context of asset protection, this arrangement can provide significant insulation from creditors.

However, not all trusts offer the same level of protection against creditors. In Missouri, there are two main types of trusts: revocable and irrevocable. Understanding the distinction between these two forms is crucial when seeking to protect assets.

Revocable Trusts

Revocable trusts, also known as living trusts, are popular for their flexibility. As the name suggests, these trusts can be altered, modified, or even revoked entirely by the settlor during their lifetime. While revocable trusts have numerous advantages, such as avoiding probate, they offer limited protection from creditors.

The primary reason for this limitation is the degree of control maintained by the settlor. Since the settlor can alter the trust at any time, courts typically view the assets within a revocable trust as part of the settlor's personal assets, thus making them accessible to creditors. Consequently, if you’re facing substantial debt or foresee a potential legal dispute, a revocable trust might not be the optimal vehicle for protecting your assets.

Irrevocable Trusts

This is where irrevocable trusts come into play. Once an irrevocable trust is established, the settlor relinquishes their right to modify or revoke the trust without the consent of the beneficiary. This loss of control may seem daunting, but it’s this very characteristic that makes irrevocable trusts an effective tool for asset protection.

When assets are transferred into an irrevocable trust, they effectively cease to be the settlor's personal assets. As such, they are usually beyond the reach of the settlor's creditors. Even in the case of bankruptcy or legal judgments, the assets held in an irrevocable trust are typically safe. It's important to note, however, that timing is crucial. If a settlor transfers assets into an irrevocable trust while a creditor's claim is pending, or if they do so with the explicit intent to defraud a creditor, a court may deem the transfer fraudulent, rendering the trust ineffective as an asset protection tool. GoGo Estate does not currently offer irrevocable trusts. However, we anticipate offering our customers these types of trusts in the future, so be on the lookout for updates.

Self-Settled Asset Protection Trusts

Missouri is one of the few states that recognize self-settled asset protection trusts. These trusts, which can be irrevocable, allow the settlor to be a discretionary beneficiary while also protecting the trust's assets from future creditors. But similar to other irrevocable trusts, these trusts must be established in good faith, without the intent to defraud creditors, to be effective. GoGo Estate does not currently offer Missouri customers the opportunity to purchase a self-settled asset protection trust. However, as we grow and expand, we anticipate offering these plans to our Missouri customers.

Conclusion

Trusts can serve as a powerful means to safeguard your assets from creditors in Missouri. However, the effectiveness of these legal instruments depends on numerous factors, such as the type of trust used, the specific circumstances surrounding its creation, and the nature of the creditor claims involved. Therefore, when considering a trust for asset protection, it’s essential to seek competent legal advice to ensure that your trust is both legally compliant and effective in achieving your financial objectives. Luckily, through GoGo Estate, you can enjoy the benefit of planning a revocable living trust and obtaining attorney support.