What is the difference between an asset protection trust and an irrevocable trust?

In Kentucky, asset protection trusts and irrevocable trusts are two different types of trusts used to protect assets from creditors. Both trusts are typically set up with a professional trustee who handles the trust assets. An asset protection trust is a trust that allows assets to be sheltered from the claims of future creditors of the grantor (the individual who creates the trust). It is designed to help protect assets from possible lawsuits, bankruptcy or other judgments against the grantor. Asset protection trusts may be revocable during the life of the grantor, or may become irrevocable upon the grantor’s death. An irrevocable trust is a trust that cannot be changed or revoked after it’s been created. It is typically used to protect the assets placed in it from future creditors of the grantor. An irrevocable trust provides the benefit of protecting the principal of the trust and any income generated from it from the creditors of the grantor. The primary difference between these two types of trust is that an asset protection trust is designed to protect assets from future creditors, while an irrevocable trust is designed to protect the principal of the trust from creditors. An asset protection trust also offers additional benefits that are not available with an irrevocable trust, such as the ability to retain control over the assets while still protecting them.

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What is the difference between an asset protection trust and an irrevocable trust?

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