I finally have my house paid off. I would like some advice on how to protect this asset from lawsuits or any other unforseen legal hazzards. I live in California, and will be homesteading shortly. Thanks im advance for any advice.
Marty,
Not trying to be snide, but if you weren’t worried about protecting your house from a lawsuit when it was almost paid off, why are you worried now?
What has changed? Have you started a new business? Are you engaged in any activities that may cause injury to others?
Are you about to be sued personally?
Not at all. I’m watching a friend go through a battle where he may loose his house from getting sued over his involvement in a dirt bike accident. I thought an umbrella policy would be enough, but I want to be sure.
one way is to put a lien on the property so an asset search shows a house with no equity in it. one way is to get a heloc. even if you haven’t withdrawn any money, title search shows a mortgage of the full amount of the heloc.
this will deter frivilous lawsuits.
another complicated way is to have one of your corps/llc put a trust deed on it. its called an equity stripping trust deed or something like that.
the best way is to hire a competent attorney to help you.
I can see Dave T’s point on the timing of asset protection for the property since from my understanding and by no means do I give legal advice, but if there is an active judgments or creditor/attorney charging order then it could be seen by a judge as a fraudulent conveyance and in that case your trust could be pierce and so the idea is to asset your property by doing before a potential lawsuit or litigation.
I would suggest using an inter vivios land trust to protect the property specifically Illinois title holding trusts. Use your corporate entity as a beneficiary in the land trust such as your family trust, IRA, LLC and so on.
Get with a good estate planning attorney to form that corporation if you have not yet done so…
To put a lien on the property I personally do not understand the logic there and that will cloud yor title and why open a HELOC if you do not need to…??
I would also verify your homestead exemption amounts to make sure if you are sued you are good since if your equity is higher than the exemption amount you will have some liability there.
Go with a trust and make sure you assign beneficial interest to another beneficiary other than yourself that way if the lawsuit does hit the lender or creditor or whomever can only legally take your beneficial interest and the other beneficiaries in the trust will NOT be affected and this is through a UCC-21 filing but please bear in mind this takes time and effort to locate you since the beneficiaries identities are secret and whomever does go after will need a court order so the trustee will not divulge the beneficiaries short of a court order.
A properly structured trust will protect you from judgments, liens, even IRS liens,mechanic liens, creditor charging order, avoid probate, bankruptcies and so on.
If you email me I will forward to you the 30 or so benefits of using these type trusts.
Good luck and I hope it works out for you.
My email is in my signature file.