Can a Lien Be Put Against a Living Trust?
A lien cannot be put against a living trust. However, any assets that are transferred into the trust can have a lien placed against them.
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Declaration of Trust
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A living trust comes into existence when a document called a "Declaration of Trust" is prepared and signed by an individual (or individuals in the case of spouses), usually referred to as the trustor, grantor or settlor. The trust is an intangible legal entity and can only act through a trustee, which is typically the same person as the trustor.
Trust Transfer Deed
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One of the most common assets transferred into a living trust is the family home. The trustor signs a trust transfer deed transferring title to the home from his name as an individual to himself in his capacity as trustee of the trust. Any mortgage on the family home continues as a lien on the property.
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Voluntary Liens
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The trustee may want to refinance the mortgage on the family home, in which case the new lender will want the new mortgage to be secured by a lien against the home. The Declaration of Trust should have a standard provision giving the trustee authority to obtain a mortgage and sign all necessary documents related to a mortgage, such as a deed of trust or lien.
Tax Liens
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If the trustor fails to pay taxes of any type, the taxing authority can place a lien against the trust assets.
Judgment Liens
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A trustor who loses a lawsuit and does not pay the judgment can have a judgment lien place against the trust assets.
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References
Resources
- Photo Credit signing a contract image by William Berry from Fotolia.com
