By Anne Wenger
Many benefits other than tax sheltering can come from using a trust, including creditor protection.
If your child consistently demonstrates an inability to manage their assets well, putting assets in a trust structure to shield them from creditors. In this case, the trustee maintains ownership of the assets, and makes payments to the beneficiary at their discretion, otherwise known as a spend thrift provision.
In these instances, creditors cannot reach inside the trust and pull out money to satisfy the debt of the beneficiary, but instead must wait until money gets distributed to the beneficiary.