What is a self-settled trust?

A self-settled trust is a type of trust created under the laws of Washington that is designed to protect assets from creditors. This type of trust allows the creator of the trust (known as the settlor) to transfer assets into the trust and retain a beneficial interest in the trust. The key feature of the self-settled trust is that the settlor can remain in control of the assets, while still keeping them out of reach of creditors. In Washington, a self-settled trust is sometimes referred to as a “spendthrift trust.” Self-settled trusts have a few key advantages over other asset protection strategies. First, they provide more flexibility than other options because the settlor retains the right to modify or revoke the trust at any time. Additionally, self-settled trusts have a longer statute of limitations, meaning creditors must act to recover assets within a certain time period. Finally, self-settled trusts are generally more cost-effective than other asset protection strategies. Although self-settled trusts offer significant advantages, they may be subject to certain limitations and can be vulnerable to attack by creditors. In Washington, for example, the settlor may be held liable for a creditor’s claim if the trust is deemed to have been created for the primary purpose of avoiding or delaying creditors. Additionally, self-settled trusts may be subject to taxation. Ultimately, self-settled trusts may provide an effective asset protection strategy for individuals living in Washington. However, it is important to consult with an experienced asset protection lawyer before deciding whether this is the right option for you and your family.

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What is a self-settled trust?

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