Full question:
We own our home free and clear and a lot on the Washington coast. We are cuurrently making payment on a motor home. Do to the market change I have lost my job and my husband.s job is not looking good. If we created a living trust and something happens to us financially can creditors attach assets that are in the trust? Specifically our home.
- Category: Trusts
- Date:
- State: Washington
Answer:
An asset protection trust is a type of trust that is designed to protect a person's assets from claims of future creditors. These types of trusts are often set up in countries outside of the United States, although the assets do not always need to be transferred to the foreign jurisdiction. The purpose of an asset protection trust is to protect assets from creditors.
These trusts are typically restricted by being irrevocable for a number of years and not allowing the trustmaker to benefit from the trust. Typically, any undistributed assets of the trust are returned to the trustmaker upon termination of the trust. The asset protection trust is basically a trust containing a spendthrift clause preventing a trust beneficiary from alienating his or her expected interest in favor of a creditor.
If a person could benefit from the trust being established, this could be a reason to challenge the asset protection trust. If the trust is created with knowledge of an impending claim, it is possible the trust could be challenged as a fraudulent conveyance. For example, creating a trust right before filing bankruptcy may throw up red flags for examination.
Homestead laws allow an individual to register a portion of his real and personal property as "homestead," thereby making that portion of the individual's estate off-limits to most creditors. Under the homestead laws of Washington, a home's value up to $125,000 may be exempt from the claims of creditors.
The following are WA statutes:
RCW 6.13.030 Homestead exemption limited.
A homestead may consist of lands, as described in RCW 6.13.010,
regardless of area, but the homestead exemption amount shall not exceed
the lesser of (1) the total net value of the lands, manufactured homes,
mobile home, improvements, and other personal property, as described in
RCW 6.13.010, or (2) the sum of one hundred twenty-five thousand dollars
in the case of lands, manufactured homes, mobile home, and improvements,
or the sum of fifteen thousand dollars in the case of other personal
property described in RCW 6.13.010, except where the homestead is subject
to execution, attachment, or seizure by or under any legal process
whatever to satisfy a judgment in favor of any state for failure to pay
that state's income tax on benefits received while a resident of the
state of Washington from a pension or other retirement plan, in which
event there shall be no dollar limit on the value of the exemption.
RCW 6.13.040 Automatic homestead exemption — Conditions — Declaration of
homestead — Declaration of abandonment.
(1) Property described in RCW 6.13.010 constitutes a homestead and is
automatically protected by the exemption described in RCW 6.13.070 from and
after the time the real or personal property is occupied as a principal
residence by the owner or, if the homestead is unimproved or improved land
that is not yet occupied as a homestead, from and after the declaration or
declarations required by the following subsections are filed for record or,
if the homestead is a mobile home not yet occupied as a homestead and
located on land not owned by the owner of the mobile home, from and after
delivery of a declaration as prescribed in RCW 6.15.060(3)(c) or, if the
homestead is any other personal property, from and after the delivery of a
declaration as prescribed in RCW 6.15.060(3)(d).
(2) An owner who selects a homestead from unimproved or improved land
that is not yet occupied as a homestead must execute a declaration of
homestead and file the same for record in the office of the recording
officer in the county in which the land is located. However, if the owner
also owns another parcel of property on which the owner presently resides
or in which the owner claims a homestead, the owner must also execute a
declaration of abandonment of homestead on that other property and file the
same for record with the recording officer in the county in which the land
is located.
(3) The declaration of homestead must contain:
(a) A statement that the person making it is residing on the premises or
intends to reside thereon and claims them as a homestead;
(b) A legal description of the premises; and
(c) An estimate of their actual cash value.
(4) The declaration of abandonment must contain:
(a) A statement that premises occupied as a residence or claimed as a
homestead no longer constitute the owner's homestead;
(b) A legal description of the premises; and
(c) A statement of the date of abandonment.
(5) The declaration of homestead and declaration of abandonment of
homestead must be acknowledged in the same manner as a grant of real
property is acknowledged.
Please see the information at the following links:
http://definitions.uslegal.com/r/revocable-living-trust/
http://definitions.uslegal.com/t/trusts/
http://definitions.uslegal.com/t/trusts-living-trusts/
http://lawdigest.uslegal.com/estate-planning/trusts-overview/
http://definitions.uslegal.com/f/fraudulent-conveyance/
http://definitions.uslegal.com/h/homestead/
http://definitions.uslegal.com/h/homestead-waiver/
http://lawdigest.uslegal.com/real-estate-laws/homestead/
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
