One of the questions I get asked all the time goes something like this: “If I put my property in a trust, will that protect it from being taken away?” It is a good question, and a really common one. So let’s talk about it. But also note that there are probably lots of attorney websites across the internet giving you an answer to this and my answer is not particularly fresh or new. Different lawyers may digress. Fair warning: this is a very general answer, not legal advice for your specific situation.
The Short Answer? No.
A trust, all by itself, will not protect your property from liability. Here’s why: a trust isn’t actually an entity. In legal terms, it’s what we call a “legal fiction.” It’s really just a relationship and a set of instructions for how your property is held and managed. It is not a separate “person” standing between you and the world, even though a lot of people assume it is.
So Is a Trust Useless? Not at All.
Trusts do a lot of good things, including giving you the benefit of your own assets if you become incapacitated and transferring property at death without probate. Another of those things is privacy. When someone is trying to figure out what you own, a trust can hold title under a different name, so your personal name isn’t sitting right there on the asset. In the right situation, that extra layer of privacy is genuinely valuable.
But does that privacy work everywhere?
In some states, yes. In California? Not really. California requires that we know who the trustee is, so the anonymity you might get in another state just doesn’t hold up the same way here.
I will give you a little more information about useful tools in a later blog post.