Does a living trust protect property from creditors? 

Yes and no. Since property in a living trust can be quickly and quietly given to the beneficiaries, your creditors may not know what you owned or find out about it until it’s already given out. Holding assets in a revocable trust doesn't shelter them from a creditor who wins a lawsuit against you, since he can go after the trust property just as if you still owned it in your own name. It may not be worth the creditor's time and effort to try to track down the property and demand that the new owners use it to pay your debts.

On the other hand, probate can offer a kind of protection from creditors. During probate, known creditors must be notified of the death and given a chance to file claims. If they miss the deadline to file, they're out of luck forever.

© Alex J. Llorente  2012