Irrevocable Trust vs The Bridge Trust: Which Works Best?

If you’re a real estate investor, business owner, or high-net-worth individual, protecting your wealth from lawsuits and creditor claims is essential.

Many turn to irrevocable trusts, believing they offer ironclad asset protection. But these trusts come with major drawbacks, including:

❌ Loss of control over assets.

❌ Complex tax and legal requirements.

❌ Vulnerability to court challenges.

That’s where The Bridge Trust® comes in—a hybrid legal strategy that combines control with lawsuit protection.

Let’s compare these two approaches and find out which is right for you.

The Reality of Irrevocable Trusts

An Irrevocable Trust permanently transfers assets out of your ownership, making them difficult for creditors to seize. But it also means you lose access and control.

Key Issues with Irrevocable Trusts:

1️⃣ No Control Over Your Assets

• Once transferred, you can’t modify or access the assets freely.

• Beneficiaries—or even the trustee—control distributions.

2️⃣ Complex Tax Implications

• Irrevocable trusts require separate tax filings.

• Gift taxes may apply upon asset transfer.

3️⃣ Legal Challenges & Court Failures

• Courts can invalidate improperly structured irrevocable trusts, exposing assets.

💡 Example: Jane & Tom placed their real estate into an irrevocable trust to shield it from lawsuits. But later, they realized they could no longer sell, refinance, or adjust their investment portfolio without trustee approval.

Why Courts Frequently Pierce Domestic Irrevocable Trusts

Despite their reputation, irrevocable trusts don’t always hold up in court.

Key Legal Cases Where Irrevocable Trusts Failed:

📌 Battley v. Mortensen (2011) – An Alaska court ruled that a domestic trust didn’t protect assets in bankruptcy.

📌 In re Huber (2013) – A Washington court struck down a trust, calling it a fraudulent attempt to avoid creditors.

📌 Kilker v. Stillman (2012) – A California court ruled a trust wasn’t separate from the owner, making assets available to creditors.

💡 Bottom Line: Courts often disregard domestic irrevocable trusts, especially if they believe the trust was set up to avoid debts.

The Bridge Trust®: A Smarter Alternative to Traditional Irrevocable Trusts

What Makes The Bridge Trust® Different?

✅ You Retain Control Until Protection Is Needed

• Unlike irrevocable trusts, The Bridge Trust® allows you to manage assets freely.

• It remains a domestic trust until a legal threat arises, at which point it transitions offshore.

✅ No Additional Tax Filings

• Since it’s structured as a grantor trust, there are no extra tax filings or gift taxes.

✅ Stronger Legal Protection

• If a lawsuit arises, The Bridge Trust® converts into an offshore asset protection trust, making it extremely difficult for creditors to reach your assets.

💡 Example: Tom owns multiple rental properties. If a lawsuit threatens his assets, The Bridge Trust® automatically shifts control offshore—outside of U.S. court jurisdiction.

💡 Bottom Line: The Bridge Trust® provides stronger protection with more flexibility, making it ideal for real estate investors and business owners.

Which Asset Protection Strategy Is Right for You?

✔ If you want to protect assets without giving up control, The Bridge Trust® is the better option.

✔ If you don’t mind losing control and dealing with tax complexities, an irrevocable trust may work—but it has risks.

💡 By understanding these differences, you can make the right choice for long-term asset protection.