Does a Revocable Living Trust Offer Protection Against Lawsuits?

The Revocable Living Trust is very popular in America. A living trust helps you avoid the cost and delay of probate. You can also avoid the dangers from jointly owning assets.

But here’s the downside: a revocable living trust won’t protect you from lawsuits. Though a revocable trust doesn’t offer lawsuit protection, you have the comfort of knowing that you can change or revoke your living trust as often as you can revise your will.

But can a living trust can cause you to lose lawsuit protection. In North Carolina, you will not lose the protection of a tenancy by the entireties by placing your real estate in a joint trust or in two trusts owned by spouses, but other assets in a revocable living trust are vulnerable to a successful lawsuit.

There are trade-offs between the different ways to title assets. Without a revocable living trust, the court will distribute your assets under your will. This can be expensive, time-consuming, and cumbersome. (Probate costs and attorney fees can consume as much as 6% of an estate and delay estate distributions.) A living trust circumvents the probate process. Your assets may immediately transfer to your beneficiaries. If you are one of those people who a has a “Sue Me” bullseye on your back (neurosurgeon or other medical professional or high profile wealthy individual) there are legally recognized mechanisms for protecting your assets. Seek the advice of your estate-planning attorney to explore the options.