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How can I protect my interest in real property?
The laws on how real property (land and structures) can be taken from you by a creditor or plaintiff in a lawsuit are different from state to state. Several states protect the full or partial value of your home from creditors.
If someone is considering whether to bring a lawsuit against you to collect debts or recover damages, it might make a difference how the title to your real property is listed. A seasoned attorney, before filing a lawsuit, often conducts an "asset search" of the proposed defendant. The person filing the lawsuit will want to know whether it is worthwhile to sue, and whether a judgment would be collectible.
Information about you and your assets is readily available from public records. An investigative firm can quickly gather all sorts of information about you—the location of your real property, bank and brokerage accounts, ownership of automobiles and watercraft, business interests, any bankruptcy petitions you may have filed, plus all kinds of other personal information for a surprisingly low fee. Be aware that this information is available to almost anyone who knows how to go about obtaining it. Thus an attorney will be able to tell if the lawsuit is worth taking, based upon the ability to collect the potential judgment.
One key to an asset search is your name. By changing the name of the registered owner of a piece of property, you can change the ownership records, and your property will "disappear" from your asset information. Simple changes, such as recording the name of the owner of a piece of real property from William Smith to Bill Smith, or putting a piece of property in your spouse's name is not good enough. However, more innovative name changes can keep the true identity of the owner confidential.
It is important to note that changing the name of ownership may have other unintended consequences. For example, in California, if a parcel of real property is transferred to a family limited partnership, real property tax reassessment will be triggered. So if William Smith transfers his personal residence to the "Secretive Limited Partnership," his purpose of concealing the true name of the property owner will be achieved, but the local tax collector may investigate this change of ownership to see if his property tax can be increased. In addition, changing the ownership may trigger Federal gift taxes. So before you change the ownership of your property, consider the unintended consequences.
Transferring property out of your name may also result in a loss of control. Some people will trade a lower degree of control for the benefits obtained. The amount of control that you want to have over your property will help you to determine what asset protection technique should be used. As a general rule, the less control you have over your assets the more your assets are protected. |
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