 TITLE: How Living Trusts Can Safeguard Your Assets CONTENT: How Does a Living Trust Work?\n-----------------------------\nThere are two basic types of living trusts: revocable and irrevocable. Both allow you to assign your property to specific heirs or organizations. When you die, the property will go to them as instructed. In this way, living trusts are similar to wills. Yet instead of the property going through probate court, which can be expensive and time-consuming, the trustee you assign will simply distribute the assets according to your wishes. The process can be resolved in just a few weeks, as opposed to a will which can take months or even years to resolve.\nHere's what you should know about the two main types of trusts:\n*   **Revocable trust**: A revocable trust allows you change it as often as you like before you die. While you're alive, everything in the trust is considered your personal property. When you die, the assets in the trust are considered part of your estate, and the successor trustee you assigned controls distribution. The trust ceases to exist after everything has been given away. Its primary purpose is to avoid probate court, since revocable living trusts do not reduce estate taxes.  \n    With a revocable trust, your assets will not be protected from creditors looking to sue. That's because you maintain ownership of the trust while you're alive. Therefore if you lose a lawsuit and a judgment is awarded to the creditor, the trust may have to be closed and the money handed over.\n*   **Irrevocable trust**: With an irrevocable trust, nothing can be changed after you sign it. At that point, everything listed becomes the property of the trust. The assets are no longer yours, so you will not be subject to estate taxes. Additionally, the assets placed in an irrevocable trust cannot be pursued by creditors seeking payment of debt. If an irrevocable trust was signed with the intention of defrauding creditors, however, legal repercussions may be enforced. There are several varieties of irrevocable trusts, including types specialized for life insurance payouts or funeral costs.  \n    With this kind of trust, assets are more protected from creditors. Since all property in it is no longer yours, a judgment creditor can't force you to close the trust to reconcile an amount due. An exception to this rule is if fraud was involved. If you used the trust to illegally escape paying your bills, that trust may not be as airtight as you think. END