What happens with trust beneficiaries have judgments against them?

 

Attorney Tom Olsen: Charlie, you're on WDBO, go ahead.

Charlie: Yes, a few years ago, you made a irrevocable trust out for me and on my house, I had my daughter's name put on there. Things have changed since then. I was thinking of taking her name off and putting my granddaughter's. The problem is my granddaughter has student loans that she hasn't paid on and hospital bills. Now, my question is, can they come in and put a lien against the house if I put it in her name?

Attorney Tom Olsen: Let's assume that your granddaughter does not live there, therefore, this would not be your granddaughter's homestead. The answer is, yes. If people have sued her, doctors, hospitals, credit cards, student loans, you name it, if they've sued her and gotten judgments against her, the moment she takes title to this property that's not her homestead, those would apply as liens against the property that she just inherited from you. Your concern [crosstalk]--

Charlie: Even if I kept it in my name and then as far as when I died it would go to her. Can they put a lien against it now, or?

Attorney Tom Olsen: Oh, no, no, no, no, no. No. As long as you're alive, any judgments against your granddaughter will not be liens against your property. They would only become liens against your property the moment you pass away and she inherits it.

Charlie: Oh, okay. I will come to your office and talk to you. I'm going to make some changes on the living irrevocable trust that you made out for me a few years back. I just wanted to get that question answered before I came over to your office.

Attorney Tom Olsen: Charlie, what we might do is rather than give this home outright to your granddaughter, we might leave it in trust for her. That way, her creditors would not be able to get to it. In case, Charlie, we'd be pleased to assist you. Feel free to give us a call next week. Christie, Charlie is talking about-- She said irrevocable living trust, but what we do for people is revocable living trust. Very rare does anybody use an irrevocable trust. Charlie, I'm sure we're talking about a revocable living trust. That means as long as you're alive, you have every right to make changes to it. Charlie, we look forward to being of service to you.