There are certain types of trusts that a person can create to protect their estate from lawsuits, bankruptcy, divorce settlements, government expropriation and other creditor claims against their property. Many persons have what is commonly referred to as a revocable living trust. These are usually set up in order to avoid probate. However, this type of trust offers no creditor protection. Traditionally, a person could not set up their own trust for their benefit and at the same time protect their estate from creditors. Trust law prohibited this type of trust. However, this has changed in many states.
Ohio is one of those states that has a special statute permitting a person to create this type of trust. The Ohio Legacy Trust Act was passed effective March 27, 2013 adding new provisions for the creation of an asset protection trust. The Ohio version of a domestic asset protection trust is known as an “Ohio Legacy Trust.” It is one of the best statutes in the country of this type. There are many other details that I can’t cover in this short biog. One important detail to be aware of is that you must plan ahead and create this trust prior to any actual creditor claims or other legal actions against you. The law prohibits any type of transfer of property to this trust if you have a pending creditor claim. As with all other estate planning, it is important to plan ahead.