Declaration of Homestead with a Living Trust

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Latest post 03-16-2010 8:43 AM by Drew. 4 replies.
  • 03-15-2010 3:05 PM

    • dem421323
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    Declaration of Homestead with a Living Trust

    Hello.  Can a homeowner file a Declaration of Homestead where his wife's living trust owns the home?  Thanks in advance for any and all insight.

  • 03-15-2010 3:47 PM In reply to

    Re: Declaration of Homestead with a Living Trust

    First of all, Illinois does not require a Declaration of Homestead. The homestead exemption (against bankruptcy and lawsuits) is automatic by statute:

    http://ilga.gov/legisl...

    If you read the statute you will note that the exemption applies to a home owned by an individual. Since your wife transferred ownership into the living trust, then it is not owned by an individual and not eligible for the statutory exemption against lawsuits and bankruptcy.

    However, since the purpose of a trust is to shield assets from creditors, the lack of homestead exemption is not a big deal.

    For more information on that, consult the attorney who created the trust.

    If you are referring to the type of homestead exemption that is available for property tax reduction, that's a different story and you'll have to find out from the taxing authority if the home is eligible for the tax reduction while in the trust.

     

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 03-15-2010 4:01 PM In reply to

    • dem421323
      Consumer
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    • Joined on 03-14-2010
    • IL
    • Posts 8

    Re: Declaration of Homestead with a Living Trust

    Thanks!  My understanding is that the trust doesn't provide creditor protection, but I'll double check.

  • 03-15-2010 4:06 PM In reply to

    Re: Declaration of Homestead with a Living Trust

    dem421323:
    My understanding is that the trust doesn't provide creditor protection,

    Not against mortgage companies that have the home as security, just against other creditors.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 03-16-2010 8:43 AM In reply to

    • Drew
      Consumer
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    • Joined on 03-30-2000
    • PA
    • Posts 48,974

    Re: Declaration of Homestead with a Living Trust

    Is you issue creditor protection or real estate taxes--issues may vary.

    And what kind of creditors?

    Its not uncommon if one person in a marriage has a high exposure career that all the major assets just happen to be titles solely in other persons name--whether that works well is best discussed with counsel.

    An irrevocable trust which is a separate entity may be a great wall as to creditors  of the prior owners other than those secured by property itself--assuming one is not  playing  games to transfer assets just ahead of creditors and you get a time window wrong  .

    I'm not sure if a living trust works that way



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