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Place the property in a spouse’s name – this can
only work, however, if it’s demonstrated that the spouse
isn’t fraudulently protecting assets. Also, if the spouse
dies unexpectedly, the property will end up in his or her probate
estate.
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Place the property in a spouse’s revocable living trust
– once again, however, it must be demonstrated that the
conveyance isn’t fraudulent.
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Place the property in an irrevocable living trust –
the longer it’s there, the better legal protection it
provides, just as long as the trustor is not also a trustee.
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Place the property in your children’s names –
once again, however, it must not be fraudulent. One drawback
is that the property may become vulnerable to a child’s
creditors.
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Use a corporation – deeding your home to a corporation,
with your family as its officers and shareholders, provides
substantial legal protection. Its main drawback is tax disadvantages.
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Use a limited partnership – this may provide the best
property protection, but the complex rules dealing with business
purpose and other requirements to set one up will need an expert
to correctly implement it.
- Tenancy by the entireties – twenty-three
states allow this form of joint ownership by married couples,
which precludes the creditors of one spouse from seizing any assets,
since each spouse is presumed to own the entire asset. This plan
only provides protection if one spouse is being sued, however.
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In order to protect yourself from lawsuits by visitors to your
home who suffer some injury, make sure that you’ve taken
all reasonable precautions to address any potential dangers,
and always carry home liability insurance.
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If you wish to augment your insurance policy, consider adding
an “umbrella liability policy,” which provides much
higher limits to your homeowner and automobile policies than
either one provides on its own.
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Most states allow a “homestead exemption” to protect
at least a portion of your home equity from suits or liquidation
in a bankruptcy. If your home equity is higher than the exemption
in your state, however, you may be forced to sell your home
and you’ll only receive the statutory amount allowed.
Check your state laws for more information.
Disclaimer: This article is provided for information
use only. It does not take the place of an attorney, a tax advisor,
or an accountant. Always seek out the advice of a licensed professional
before undertaking any significant change in your financial situation.
We at Valerie Fitzgerald and Associates realize that you are in the information gathering stage of your purchase and we respect your privacy. Should you have any questions, please feel free to email us at info@valeriefitzgerald.com or call us directly at 310-285-7515. If you or anyone you know is looking to buy or sell a home, please note that we can provide detailed information and access to:
You can count on the services of Valerie Fitzgerald and Associates to provide you with information you can trust.
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