Is a home in a trust subject to creditor claims?


In Florida, an individual's home is absolutely protected from creditor claims.  However, when your home is owned by your trust, you may lose the protection from creditor liens.


Stephanie: Yes. I wanted to find out. My mother-in-law has a trust. We recently had the house -- the only asset she owns is her house.

Attorney Tom Olsen: Okay.

Stephanie: Does have a small lien, not lien, but home equity line. We wanted to find out. We put her into a facility and it costs everything that she makes to keep her in the facility. She had put a lot of debt on some credit cards. We wanted to find out, since we're not paying these credit cards, if they can come back and put a lien on the house? If the house is in the trust.

Attorney Tom Olsen: Here, in the state of Florida, our Florida Constitution says that nobody's home is subject to creditor claims. I'm talking about the home you live in, not your rental property, not your Beach County condo, but the home that you live in. Doctors, hospitals, credit cards, automobile accidents, bankruptcy, you name it, they can sue your mom all day long and they cannot put a lien or they will not have a lien against a home that she lives in. Now, Stephanie, my slight concern is this: is this protection is given to individuals, if you're telling me that your mom is owned by her trust? Well, that may change things. Is her home entitled in the name of her trust?

Stephanie: Yes.

Attorney Tom Olsen: Stephanie that now slightly concerned for her. Stephanie, there's a better way to handle avoiding probate on her home. It does not involve putting her home into her trust, Stephanie. It involves a ladybird deed as a way to avoid probate.

Stephanie: A ladybird deed?

Attorney Tom Olsen: Yes. Stephanie, I'm slightly concerned for you. Is your mom still competent or -- is she still competent?

Stephanie: No. No, we actually have a form that's been filled out by a doctor that says she's no longer. My husband now is her complete power of attorney for everything.

Attorney Tom Olsen: Well, if he has a good, durable power of attorney for her, that's going to be critical to do two things, Stephanie. Number one, to undo what she's done and do it the right way, so her home is not subject to creditor claims. Number two, to do any Medicaid planning. Is she on Medicaid or she might go on Medicaid?

Stephanie: No, she's not on Medicaid. She actually makes a decent amount of money. It's just every dime of it goes to care for her.

Attorney Tom Olsen: I got you. Stephanie, you've heard what I have to say, so under normal circumstances, I'm not concerned. But because your mom's home is owned in the name of her trust, not her individual name, I am concerned. I'd recommend that you guys do use a ladybird deed instead to avoid probate. Your husband can use his power of attorney to accomplish that goal. If you want to call us next week, you're welcome to call us at the office next week. Now, we have booklets on ladybird deeds as a tool to avoid probate. If you want to get that book, Chrissy, tell people how to do that.

Chrissy: You can call or text Chris at 407-808-8398 and if you include your name, full name and address, we will be happy to get those booklets out to you.