An Inheritance Trust is a trust established for the specific purpose of receiving an inheritance in a manner that is protected from your creditors and excluded from your estate for federal estate tax purposes. The laws of nearly every state, including ours, prohibit so-called "self-settled trusts" - an irrevocable trust you establish yourself for your benefit, yet which purports to protect the trust assets from your creditors. Therefore, once you receive an inheritance, you cannot asset protect the inheritance yourself.
However, if you are expecting an inheritance - for example, from a parent or grandparent - and that person is unable or unwilling to set up your inheritance in an asset-protected trust, you can protect these assets yourself by creating an Inheritance Trust to be the recipient of the inheritance. An Inheritance Trust legally protects the inherited assets from creditors and divorce yet allows you to access them as necessary. This trust also removes the assets from your estates so that these assets will not be subject to federal estate tax upon your death. You can even have the ability to appoint these assets at your death to a trust that will provide similar protections to your children and grandchildren, yet be exempt from federal estate and generationskipping transfer taxes for generations.