If you’ve watched Yellowstone, you’ve seen what happens when legacy and law collide.

The Duttons use every tool at their disposal to keep the family ranch intact—layering in conservation easements, resisting outside buyouts, and carefully controlling who has access to what. It’s estate preservation by any means necessary.

To be fair, most families don’t deal in cattle or political favors. But if you’ve set up a trust to protect what you’ve built, the same risks apply. When a trust isn’t structured to anticipate conflict—creditors, legal claims, internal disputes—it can become contested ground.

Some strategies can help protect your trust before any of that starts.

Which trusts provide the strongest protection for your assets?

Different types of trusts provide various levels of asset protection, based on how they’re structured.

The two main types of trusts are revocable and irrevocable trusts:

• Revocable trusts allow the person who creates the trust to retain control over the assets, which means you can modify or revoke the trust at any time. This is great for having a flexible estate plan, but it means that the assets in the trust are still considered part of your estate, and are more vulnerable to lawsuits or creditors.
• Irrevocable trusts require you to relinquish control over an asset; once it enters the trust, it no longer belongs to you, and you can’t change your mind. As such, these assets are usually protected from creditors, litigation, or other legal claims.

Irrevocable trusts serve as one of the strongest asset protection tools, but they also provide less flexibility and involve relinquishing control over your assets in perpetuity.

Additionally, there is a great deal of variation between types of irrevocable trusts, making it imperative to understand your options fully.

Domestic asset protection trusts (DAPTs)

Domestic asset protection trusts can be a valuable tool to shield your assets from creditors or litigation. While DAPTs are irrevocable, the grantor (you) can also be a beneficiary of the trust.

About one-third of states allow DAPTs, but the exact structure of the trusts can vary from state to state. However, even if you don’t live in one of those states, you can still open a DAPT based in other jurisdictions.

A trust like this may sound airtight, but structure matters—especially when your home state doesn’t recognize DAPTs. For example, if a Texas resident establishes a DAPT in Nevada but names themselves as trustee and beneficiary, a Texas court could treat it as if the trust doesn’t exist. 

Without the right separation of roles and clear legal boundaries, creditors could end up with a path in.

Offshore trusts

Like DAPTs, offshore trusts (sometimes called foreign asset protection trusts) provide an even stronger layer of protection by establishing a trust in a foreign jurisdiction with more favorable asset protection laws, making it difficult for creditors to access those assets.

If an entity wants to access your assets in an offshore trust, they’d have to proceed through a foreign legal system, which can be an effective deterrent. However, it’s essential to remember that offshore trusts come with strict compliance and IRS reporting requirements, and failure to comply can lead to significant penalties.

Medicaid asset protection trusts (MAPTs)

For those concerned with long-term care, Medicaid asset protection trusts can protect your assets while helping you qualify for Medicaid benefits. When you transfer assets into a MAPT, they are no longer considered part of your estate, and thus can help you qualify for Medicaid.

Someone looking to create an MAPT should keep in mind that the trust should be created and assets transferred at least five years before you apply for Medicaid.

Be mindful of transfer laws

Transferring assets into a trust can offer protection, but transfers can be challenged in court under fraudulent transfer laws. A court may be able to void a transfer if it determines that the intent was to defraud creditors, especially if the transfer occurred shortly before a lawsuit was filed.

In Texas, the statute of limitations on fraudulent transfer laws is four years, meaning that someone could file a lawsuit to void the transfer within four years of when the transfer occurred.

Consider a business owner in the early stages of a legal dispute—maybe a contract conflict that hasn’t yet reached court. If they move a property into a trust six months before the lawsuit is filed, a judge might view that transfer as an attempt to sidestep the claim, and unwind it completely.

Save in a retirement plan

If an irrevocable trust is not in the cards, consider using your retirement account as another avenue to protect your assets from litigation.

ERISA-qualified retirement plans, like 401(k)s, are protected from creditors under federal law. IRAs have more limited protections, but are still shielded up to $1.5 million in bankruptcy cases, depending on the state and type of IRA (traditional, Roth, etc.).

Create an LLC

Forming a Limited Liability Company (LLC) can provide additional protection for your assets. An LLC allows individuals to transfer assets while maintaining control and offering “charging order protections.” This can put limits on a creditor’s ability to seize assets directly.

LLCs can also help shield a business owner’s personal assets from their business. 

Let’s say you run a family-owned construction company and someone files a personal injury claim against you. If the business is held in an LLC, the claimant can’t seize your equipment or contracts outright. Instead, they’d be limited to distributions—if and when made. That barrier can significantly affect how exposed your operating assets are.

Consider homestead exemptions

Not every asset needs to be held in trust to be protected—and for Texas homeowners, the homestead exemption is one of the strongest built-in safeguards available.

Texas law shields your primary residence from most types of creditors, meaning it can’t be forcibly sold to satisfy a judgment. That protection applies regardless of whether the property is in a trust, an LLC, or your name.

Homestead rules vary significantly from state to state, though, and if you own property across state lines, those protections may not carry over. This is where a Texas-based attorney can help evaluate your entire portfolio, identify which properties qualify, and build legal strategies that preserve those protections no matter where the property sits.

Get guidance from a Texas trust attorney

Trusts and other asset protection tools can be powerful, but their effectiveness depends on proper planning and legal compliance. An experienced Texas trust attorney can help ensure your asset protection strategy is structured to withstand legal scrutiny and shield your assets from litigation.

At the Law Offices of Shann M. Chaudhry, Esq., PLLC, our asset protection attorneys can help tailor trust and estate planning to your needs. Contact us today to learn how to protect your assets and secure your financial future.