How do I protect my spouse from creditors?

When a spouse dies, the estate is usually left outright to the surviving spouse. This is a big mistake! Anything owned by your surviving spouse can be taken away. The first rule of protecting your spouse from creditors after your death is, “Do not let your spouse own your assets after you die!”
This strategy is not as bad as it sounds. In fact, most spouses actually appreciate the strategy when they learn they can maintain the benefits of ownership without the risk of having it exposed to any creditor claims.
The implementation of this strategy requires that you first create a revocable living trust and transfer your assets into it. When you die, the instructions of your revocable trust state that your assets will be moved to a special trust inside your revocable trust that can be used for your surviving spouse’s health, education, maintenance, and support. These instructions mean that all of the trust’s assets are available to maintain your spouse’s lifestyle. The beauty of this plan is that although your spouse will receive all the benefits of being a trust beneficiary, your spouse will not face any of the risks faced by those who receive their inheritances outright, including the risk of losing it to creditors.
As a trust beneficiary, your spouse is entitled to what the law calls the “beneficial enjoyment” of the trust property. This gives your spouse all of the benefits of enjoying the use of the trust property without fear of losing it to creditors.
This arrangement give your spouse “control without ownership.” Even though the trust owns the assets, your spouse will continue to manage and control them. The benefit is that if a creditor makes a claim against your spouse, assets in the trust are protected because they are not legally owned by your spouse–they are your assets left in trust under your spouse’s control and for your spouse’s benefit. Because a creditor is not your spouse, the creditor has no right to claim the trust’s assets!