The following is some information regard Revocable Living trusts and their potential for being used as an asset protective entity, especially for homes. There is a lot of information regarding Living Trusts out there, with a lot of confusion about what they can really be used for and how. Legally Mine is always available for questions (800-375-2453) , at no cost to you, if you do want to learn more. Otherwise please let me know if you have any questions or comments.
This information comes from the “Asset Protection Bible.”
Revocable Living Trust – A Living Trust is generally considered to be an estate planning tool used to avoid probate and to reduce estate taxes, but it can also be a method to obtain limited protection for your home.
Protection of Assets. As noted above, a living trust is generally regarded as an estate planning tool that is used to avoid probate and reduce estate taxes, but it generally offers little asset protection. There are times. however, when the Living Trust may offer adequate protection for the home or other assets.
For example, placing a home into the revocable living trust of a doctor’s wife, who has relatively low risk of a lawsuit, may protect the home from the claims of judgment creditors of the doctor himself As another example, in a state that provides almost universal homestead protection, thus making asset protection no longer the predominate concern, the home may be simply placed in the Living Trust to avoid probate. Perhaps the state’s homestead law provides partial protection (such as $40,000 in Washington) and the equity in the home is lower than the amount protected. The family may feel adequately secure and place the home inside the Living Trust. The home would be titled in the name of the trust and listed on the Schedule A of the trust, either as separate property of the least vulnerable spouse (Sec Case Study 1) or as joint property of the trust (See Case Study 2).
Other Considerations for a Home. For some states (such as Florida), placing the home in the Living Trust avoids probate, but can nullify the homestead protection provided by stare laws. In those states, the home is often placed in the trust by the use of a “Sleeper Deed.” Under this approach, a Quit Claim Deed to the trust is signed and notarized by the couple; however, the deed is not recorded until after the death of the second spouse. This keeps the home in the parent’s individual names while they are living (preserving the homestead benefits) and transfers the home into the trust upon their death (to avoid probate.)