Does a trust protect against liens?

Putting a house in trust offers no protection against tax liens on the property. If you appoint someone else as trustee, though, the IRS can’t attach a tax lien to your house for the trustee’s debts.

Can a trust be subject to lien by the IRS?

If your trust earns any income, it has to pay income taxes. If it doesn’t pay, the IRS might be able to lien the trust assets. Putting real estate into a living trust or irrevocable trust doesn’t affect the property taxes in any way, shape or form. The property tax bill has to be paid, whether your trust or you is the owner.

Can a trust be set up to avoid inheritance tax?

At least one type of trust is set up to avoid and alleviate these taxes. The estate pays the estate tax, and the beneficiary pays the inheritance tax, although an estate can be set up to pay that cost, too, on behalf of the beneficiary.

Can a living trust protect a home from a lawsuit?

Your beneficiaries’ creditors. The living trust can keep your home safe from your creditors and from any lawsuits that might be brought against you, but you need to make sure the legal document creating the trust is properly drafted so that your home is also protected from any lawsuits that might be brought against your beneficiaries.

How is a trust used in estate planning?

One common estate planning tool used for this purpose is a trust. Essentially, a trust is a legal arrangement under which the creator (often called a grantor or settlor) transfers ownership of assets into the care of another person (the trustee) to be administered for the benefit of another person or group of people (the beneficiaries).

How are family trusts used in estate planning?

Family trusts can also be useful in estate planning if you’d rather avoid probate. Probate is a legal process that involves the court system. An executor is assigned to collect and liquidate your assets, pay your creditors and distribute any remaining assets to your heirs according to the terms of your will or state inheritance laws.

Can a surviving spouse take control of a credit shelter trust?

But because the trust is managed by a designated trustee, the surviving spouse never actually takes control of the trust’s assets. Therefore, the transfer does not add to the surviving spouse’s taxable estate. Credit shelter trusts are also known as AB Trusts or Bypass Trusts.

Can a creditor place a lien on a trust?

That includes when your creditor is the government. If you have a debt you can’t pay, creditors can place a lien on trust property – and if you owe the government, it can place a tax lien on trust assets. An irrevocable trust offers better protection, but it still isn’t lien-proof.