Does a Living Trust Protect Your Assets from a Lawsuit?

A revocable living trust is one of the most popular estate planning tools in Florida. It allows you to transfer your assets to beneficiaries without probate, retain control during your lifetime, and plan for incapacity. But despite these advantages, a revocable living trust does not protect your assets from lawsuits or creditor claims.

Revocable Living Trusts Do Not Provide Lawsuit Protection

Assets held in a revocable living trust are still legally owned and controlled by the person who created the trust—also known as the grantor. Because the grantor can amend or revoke the trust at any time, Florida law treats the assets as if they are owned outright. That means a judgment creditor can reach those assets just as if they were titled in your name.

For example, if you place your home, bank accounts, or investment portfolio into a revocable trust and later lose a lawsuit, those assets can still be used to satisfy a judgment. The trust does not create a legal barrier between you and your creditors.

Why Revocable Trusts Are Still Useful

Even though revocable living trusts don’t protect assets from lawsuits, they are still valuable for several reasons. The main benefit is avoiding probate. When you die, your successor trustee can immediately manage and distribute your trust assets without court involvement. This reduces delay, legal fees, and public exposure of your estate.

Revocable trusts are also a flexible way to plan for incapacity. If you become mentally or physically unable to manage your finances, your successor trustee can step in without requiring a guardianship proceeding.

How to Protect Assets from Lawsuits

If your goal is to shield assets from creditor claims or lawsuits, you need more advanced planning. In Florida, several tools are available that offer actual asset protection:

• Homestead property is generally protected from creditors under Florida’s constitutional exemption.
• Tenancy by the entirety ownership between spouses can protect jointly owned assets from creditors of only one spouse.
• Florida LLCs and limited partnerships can protect business and investment assets from personal judgments.
• Irrevocable trusts, especially those established for third-party beneficiaries or offshore, may provide strong asset protection—if properly structured.

Asset protection must be proactive. Once a lawsuit is filed or a judgment is entered, many options are no longer available.

Common Misconceptions About Living Trusts

Many people mistakenly believe that putting assets in a revocable living trust creates some kind of legal separation from their personal finances. In reality, a revocable trust is a pass-through arrangement. You file the same tax returns, control the assets, and have the power to undo the trust entirely. Because of this level of control, courts allow creditors to access trust property to satisfy debts.

Only irrevocable trusts, where you give up control and cannot amend the terms, offer potential protection from lawsuits—and even then, only under the right circumstances.

Bottom Line

A revocable living trust in Florida is a powerful estate planning tool, but it does not protect your assets from lawsuits or creditors. If asset protection is your goal, you’ll need to consider other legal strategies. The best approach depends on your specific financial situation, risk level, and long-term goals.