By Kameryn McCollough

Many people seek to use estate planning as a way to protect their assets against creditors. While there are ways to create protections using wills or trusts, creditors are still able to reach those assets under certain circumstances. That being said, a will or a trust is still useful to create boundaries for your beneficiaries and any creditors you or your beneficiaries may have.

Here are ways you can limit creditor access to your assets through a will or trust.


Wills must go through probate, which is public, can be costly, and takes time. However, there are asset protections in the probate process that are available to immediate family members of the deceased:

As of 2019, Colorado provides a homestead exemption of $75,000 ($105,000 if disabled/elderly) for a home occupied by the deceased’s family. The surviving spouse or minor children can take advantage of this exemption when dealing with creditors of the deceased, because this exemption protects at least a portion of the equity in the family home. This exemption does not interfere with other exemptions or allowances of the surviving spouse and/or minor children.

protecting assets from creditors

During the probate process, Colorado also allows the surviving spouse (or dependent children if no surviving spouse) exempt property from the estate in the form of cash of $34,000 (find yearly cost of living adjustment here). This amount has priority over all claims against the estate, except for claims for costs/expenses of administration and reasonable burial, funeral, interment, cremation costs. This amount may decrease as necessary to provide for the family allowance (below), depending on the amount of assets contained in your estate.

Finally, Colorado entitles the surviving spouse and minor children actually being supported by the decedent to a reasonable allowance in money out of the estate for maintenance during the period of administration (generally one year if the estate is inadequate to discharge allowed claims). The amount has priority over all claims against the estate, except for claims for costs/expenses of administration and reasonable burial, funeral, interment, cremation costs. The amount of allowance may not exceed $34,000 per year, or $2,833 per month. (Find yearly cost of living adjustment here.)

The personal representative is directed to pay off claims of creditors using estate assets in a certain order during the course of probate. Therefore, property placed in a will is not necessarily protected from your creditors after you are gone. However, as explained above, there are laws that allow for exemptions or other allowances that benefit your surviving spouse and minor children and are unreachable to creditors.


Assets placed in a trust generally do not need to go through probate, which allows beneficiaries quicker access to assets, avoids the cost of a probate proceeding, and provides additional privacy as compared to a will. Trusts can be revocable or irrevocable, and the type of trust will determine the level of protection over your assets:

A revocable trust is one where you, the trustor, are able to cancel or change the terms of the trust at any time, and you maintain access to your assets. However, a revocable trust does not necessarily work to keep assets out of reach of creditors. This is because with a revocable trust, all of the assets you place into the trust are still considered your legal property. This adds flexibility for you, but also leaves the door open for creditors to gain access to your assets; a creditor with a judgment may force you to pay the creditor from the trust or to terminate the trust altogether to pay the creditor.

If you sincerely want to keep assets much more protected from creditors, you should look to an irrevocable trust. With an irrevocable trust, any assets transferred to the trust become the property of the trust itself, rather than the trustor (you). Moreover, terms of the trust cannot be changed, or the trust terminated, without approval of the grantor and the beneficiaries, or a court order. This means a creditor can generally no longer gain access to those assets to satisfy a debt against you (unless otherwise ordered by the court).

The issue with an irrevocable trust is that you would no longer have access or ownership over the assets placed in the trust, so you can run the risk of depriving yourself of necessary funds and assets you will need for the remainder of your life.

You can create an irrevocable trust with a spendthrift provision that protects your assets from creditors but will primarily benefit your beneficiaries. The spendthrift provision forbids the beneficiary from spending trust money before they actually receive distributions, and the trustee has the authority to determine what payments are necessary according to the trust agreement. This means a beneficiary’s creditors do not have access to the trust’s assets themselves, and will only have access to funds once they are paid out to the beneficiary. However, you are not allowed to create a spendthrift trust and name yourself as the beneficiary.

At Andersen Law PC, our office regularly prepares estate planning documents, and we can work with you to find the best options for your assets and life goals. If you have questions about this process or would like more information, please contact Andersen Law PC at 720-922-3880 or email


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