DT or Kly:
I suppose that wealthy people place their money in trusts. However, if they are determined liable for some tort (such as harming someone in a car accident), regardless of any insurance payment or out of court settlement, etc., does the trust protect their money from a judgement or similar court ruling?
It depends how the trust is established and perhaps who the beneficiary is. If the trust is revocable, meaning that you retain ownership and can change the terms, purpose and amount of the trust, then the assets are not protected against those, who have a legal claim against you. If it is irrevocable, meaning that you give up all control (essentially ownership) of the trust, then creditors and judgments against you can't reach the assets for the most part.
I advise that the best way for most people of insulating yourself and loved ones from creditors, judgments and taxes is through whole life insurance. The assets and payout are free from federal and local tax and any other claim. It also bypasses probate allowing money to pass completely to your loved ones without delay.
