How to protect my real estate form creditors?

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How to protect my real estate form creditors?

I bought a house in my own name after I married. I did not put my husband’s name on the deed because I discovered too late that he never paid a lot of bills from his previous marriage. Now he has recent medical bills not covered by insurance. We can make payments on those, but both of us are retired, on a fixed income. Can they take my house away for his medical bills if they think we are not paying fast enough? My son and his girlfriend want me to sign over my house to their LLC, and give me a 99 year lease to protect my home, since it is willed to my son upon my death.

Asked on June 28, 2017 under Real Estate Law, Wyoming

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Because the house was purchased *after* you married, it is possible that one of his creditors--like medical care providers--could go after the house, even if it is only in your name. That is because since it was purchased while you were married, it presumably was bought at least in part with your husband's money or some contribution, explicit or implicit; and since you put it only in you name when you *knew* he had a lot of debt, your putting it only in your name, when it presumptively was bought or funded at least in part with money or assets from him, could seen as an effect to defraud creditors. Transactions or arrangements made to hide assets from creditors can often be set aside in a lawsuit by a determind creditor, on the grounds that it was a fraudulent transfer. It is not certain this would happen, or even that creditors would necessarily try to do this, but it is a possibility based on what  you write, since what you write seems like a sitution of having bills in one person's name or for one person while the asset is in the other spouse's name, thereby attempting to hide or protect it from creditors. There is a risk that creditors of your husband could reach your house. (The answer would be different, by the way, if you had purchased the home pre-marriage; it would have been much safer then, as an asset predating marriage and your husband's money and debts.)
The transaction your son proposes may not help, since that transaction would *certainly* be seen as an effort to hide the asset from creditors and therefore could be set aside as fraudulent. If they could get at the house as is, they could get at it after the transfer you describe; and they can't or don't get at the house as is, transferring to your son is irrelevant. Only if you sold it to him for fair market value would the home be protected (but creditors could reach the sale proceeds from the home).
Assuming the house is a valuable asset, it is worth consulting with a trusts and estates attorney who can more fully advise you of the risks and suggest possible protective strategies, if there are any.


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