A trust is a handy tool to use as you create your estate plan. It can allow you to do many things with your assets and can even serve to protect your assets.
However, you will have to choose the right type of trust. A revocable trust is fluid. You can make changes to it and even cancel it. That type will not offer you protection. An irrevocable trust, though, can provide you with a lot of protection in various situations.
As you age
Irrevocable trusts are a great option when you are getting older. They offer a way for you to transfer ownership. Because of this, you do not have to count them as income for certain income-based programs. You may be able to use them to help you qualify for Medicaid as long as you create the trust prior to the look-back period, which is a time when the state can count assets even if you got rid of them or changed ownership. In addition, nobody will be able to take those assets from you to pay for a nursing home or other healthcare.
During financial issues
If you need to file for bankruptcy, having assets in an irrevocable trust can keep them safe. These assets are not under your control, and you cannot liquidate them for money to pay debts, so the court will not count them. The court or creditors also cannot seize them unless a creditor has a lien on the property.
Keep in mind that you cannot create a trust just to bypass obligations or qualify for benefits. These protections are only in place if something happens down the road.