Can You Sue Someone When Their House Is in a Trust?

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An irrevocable trust can protect a home from seizure.
An irrevocable trust can protect a home from seizure. (Image: Photos.com/Photos.com/Getty Images)

If you win a lawsuit against someone and he is required to pay you damages, the court may force him to sell his assets, including his home, to pay you. You may wonder, though, if you can collect from an individual whose assets are in a trust. In most cases, whether or not you can seize the individual's assets depends on the type of trust he has created.

Revocable Trusts

A revocable trust is an arrangement in which an individual, called the grantor, transfers the ownership of assets to a separate entity. When the grantor dies, the assets in the trust pass to named beneficiaries. The grantor can still revoke or amend the trust at any time while he is alive, regardless of his reason for doing so. Because the grantor retains control over the trust's assets, they are subject to seizure after a lawsuit.

Irrevocable Trust

Like a revocable trust, an irrevocable trust is a separate entity a grantor creates to hold his assets until he dies. Unlike a revocable trust, the grantor can't typically amend or revoke an irrevocable trust. Because the grantor has no access to the assets after he transfers them into the trust, assets in an irrevocable trust are usually exempt from seizure to satisfy the terms of a lawsuit settlement.

Implications

Regardless of the type of trust an individual has, you can legally file a lawsuit against him. If the individual you are suing has his home or other assets in an irrevocable trust, you can't force him to sell them if you win a settlement. However, you can still collect from his unprotected assets, including any property he has transferred into a revocable trust.

Considerations

Although you can't typically attach to assets contained in an irrevocable trust, the trust may be invalid if the grantor created it or transferred assets into it after you filed your lawsuit. If the court determines that the grantor created the trust or transferred property to prevent you from seizing his assets in the lawsuit, it may consider the transfer a fraudulent conveyance, which means the assets won't receive protection from the trust.

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