The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: JMobbin on January 21, 2016, 10:54:25 AM
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Hello,
My wife and I recently paid off the mortgage on our home, the lender has filed the lien release and we have removed them as a lien holder on our insurance policy. With no escrow account we made arrangements to have the tax and insurance bills sent directly to us for payment. This is our primary residence and we are now wondering the best way to hold title moving forward to protect our home from litigation. Are we leaving ourselves exposed by holding title under our personal names? Any advice would be greatly appreciated.
Thanks!
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If making your assets inaccessible to future creditors is more important to you than the typical tax benefits given to owner-occupied homesteads in most jurisdictions you may be living a non-typical middle class lifestyle.
If that is so, you need a more comprehensive asset shell game than just titling your house to an LLC in your joint control.
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If you are that worried about someone coming after you, get an umbrella insurance policy for 1 million or whatever sum lets you sleep at night. Umbrellas can usually be had cheaply through your regular insurer as long as you carry homeowner's and vehicles with the same group.
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Having a mortgage on the house would have been better. You can still take a HELOC out on the house even if you don't use it. I carry an umbrella policy. A paid off property can be put into an irrevocable trust. Here is one big key. The rich control property, but they don't own it. Tough to have what you don't own confiscated.
Your best strategy is to be deep in debt, own nothing directly, and carry umbrella insurance. Most judgments are paid out by insurance agencies, not the defendant.