Liability with assets in irrevocable trust, bsteiner

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Liability with assets in irrevocable trust, bsteiner

Post by JoinToday » Wed Jul 18, 2018 11:44 pm

I am following the advice given by bsteiner: When wife & I pass, our assets are held in an irrevocable trust for the beneficiaries for asset protection considerations (divorce & lawsuit risks in particular; no spendthrift or substance abuse issues or concerns). It occurred to me that if a house is owned by the same irrevocable trust and someone were to hurt themselves on the property, the assets in the trust may be exposed to some liability.

If the house were to be held in a separate trust, this seems like it would solve the liability issue. But what constitutes a separate trust? If it has the same name, but different tax ID number, is that good enough? Or does it need to have a different name also?
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Re: Liability with assets in irrevocable trust, bsteiner

Post by Carefreeap » Thu Jul 19, 2018 1:14 pm

Doesn't the house have insurance, including liability insurance?

If there are substantial assets then perhaps an umbrella policy is needed?

If you're really worried about lawsuits against the property than holding it in an LLC might be warranted. But that leads to a whole 'nother set of hassles. There's a point where you need to look at the probability of being sued and plan accordingly.

There's no risk-free scenario.

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