In the course of estate planning, it is not uncommon for a client to share their concern about potential liability and to wonder what can be done to help protect them from a lawsuit or some other type of financial liability. Does a trust shield your assets from liability in such circumstances?
A revocable living trust typically does not offer added liability protection. For a married couple, some types of joint trusts may provide a layer of protection in some instances. As a general principle, a revocable trust is simply not a tool for broader liability protection. What can be done?
There are variety of approaches and tools that can be utilized to protect a client from liability. Some types of irrevocable trusts can be used to reduce or shield liability. Separate business entities such as an LLC or corporation are effective in some situations to provide liability protection. Additional measures can also be considered such as insurance and titling. Liability considerations are top priority concerns in some situations and the use of the right tools, and the right approach is vital.