By Lee R. Phillips

Today I will answer additional inquiries from people who are researching better ways to handle asset protection and estate planning matters. I hope everyone can learn from the things others are facing, and see options to explore with your own trusted advisors.

Q. My parents and I just purchased a condo as joint tenants. We are each 1/3 owners in the property and all 3 of our names are on the real estate deed. The property is my permanent residence only. If the property is put into my father’s living trust (I am a secondary trustee, after my parents and the primary beneficiary) can a creditor place a lien or force the sale of this property (while in the trust) if the possible future judgment is only against myself (an individual)?? Thanks!! Brian W.

A. In my book, Guaranteed Millionaire I have a line that reads “Kids are like yogurt, you never know when they are going to go bad.”  The line is intended to make the reader laugh, but it drives home the point that the more names that are on your deed the greater the likelihood that the property will be subject to a creditor.  The answer is “Yes, when any one of you listed on the deed has a creditor, that creditor can force the sale of the property. If you take your name off the deed and make the sole “owner” your parent’s trust, then the property would not be subject to future creditors you may have.  However, at that point it is not your house any more.  It is your parent’s piece of property.  If they let you live there for free, the IRS will impute a reasonable rent to their income.  Additionally, you can’t take advantage of the tax advantages home ownership gives you.  They can’t take advantage of those either, because it is not their personal residence.  The house will still be subject to their creditors, even though it is in the trust.  The trust doesn’t protect property from creditors.  It prevents probate.  The house will be included in your parents’ estate for estate tax calculations.  You have lost total control over the house.  (Actually, you have no control now, because your parents have to approve a sale or whatever.)  If you are taking your name off the deed to avoid current creditors, they can undo the transaction, because it is a fraudulent conveyance.  Why are your parents on your deed as joint tenants in the first place?  If you need them to get a loan, they should simply guarantee the loan and not go on the deed. (more…)

By Lee R. Phillips

We receive lots of queries from people who are struggling with the important issues of asset protection and estate planning. Periodically, we answer some of those questions for everyone to learn from, or at least help you see options that you need to discuss with your own trusted advisors.

Best Way to Pass Your Home

Q.  My girlfriend’s mother is in her early 60′s and has placed her house and another piece of property in her three daughters’ names. Her fear is that she may become ill and have to go in a nursing home and have to sell these. Their current value is approximately $600K. She wants the girls to inherit the properties. I am wondering if a Revocable Trust would accomplish this as well and protect the mother if one of the daughters were to get in trouble financially prior to her death so that the mother could always remain in the home. This situation is in Virginia. Chris (more…)

By Lee R. Phillips

Brittany Murphy’s death has certainly come as a shock to the world.  In a way, it is even more shocking to learn that the death was “due to natural causes,” according to the Los Angeles coroner.  Her husband, British screenwriter Simon Monjack, is in shock and is quoted as stating, “I am feeling beyond devastated.”  The shock and grief associated with the death of a loved one can never be prepared for or softened.

The death of one as young as Brittany Murphy reminds us all of our fragile mortality and punctuates the uncertainty of life.  As an individual, I see a personal tragedy on several levels.  As an attorney, I hope she had her legal ducks in a row.  Her death reminds us of our obligations that need to be attended to.  It makes a huge difference.

Michael Jackson also died this year.  His death was also a personal tragedy, but he had done his legal homework, and his estate lives on.  You might remember that after his death the media squared off to have a heyday reporting on the financial dealings of his large troubled empire.  After the first week, it was disclosed that the foundation of his empire was a living revocable trust.  The trust had been maintained. (Just having a trust document isn’t enough.  It has to be used and “maintained.”)  I imagine the media gave a great groan, when they learned the trust was in place, because they were shut out of the juicy details of Michael Jackson’s estate. (more…)