Why buy your house through a trust?

[Trismegistus4]

I could have sworn I heard it said, way back in the far reaches of my memory, maybe even before medical school, that doctors should establish a trust to buy their house, rather than buying it in their own name. But I can't remember why.

I remember thinking at some point that the reason was so that patients couldn't find out where you live, but now that I think more explicitly about it, I don't recall ever actually being told that. It now occurs to me that the reason is financial: e.g., some tax benefit, or for asset protection (i.e., a plaintiff's attorney won't be able to discover that you own a house when you get sued, and therefore it can't be taken from you.)

Has anyone out there bought their house through a trust, and if so, why? I'm getting ready to buy my first house, and thus if there is some real, definite benefit to doing it this way I need to get a trust set up, but I also don't want to bother if it doesn't actually confer any advantages. (I started googling and found one site, though not specific to doctors, saying it doesn't actually help with asset protection.)

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[redfish955]

I could have sworn I heard it said, way back in the far reaches of my memory, maybe even before medical school, that doctors should establish a trust to buy their house, rather than buying it in their own name. But I can't remember why.

I remember thinking at some point that the reason was so that patients couldn't find out where you live, but now that I think more explicitly about it, I don't recall ever actually being told that. It now occurs to me that the reason is financial: e.g., some tax benefit, or for asset protection (i.e., a plaintiff's attorney won't be able to discover that you own a house when you get sued, and therefore it can't be taken from you.)

Has anyone out there bought their house through a trust, and if so, why? I'm getting ready to buy my first house, and thus if there is some real, definite benefit to doing it this way I need to get a trust set up, but I also don't want to bother if it doesn't actually confer any advantages. (I started googling and found one site, though not specific to doctors, saying it doesn't actually help with asset protection.)

Talk to a lawyer and have a few thousand set aside if you plan on building actual wealth during your lifetime. It is basically a vehicle that will protect your legacy until your kids or grand kids receive it.

 

[Trismegistus4]

Talk to a lawyer and have a few thousand set aside if you plan on building actual wealth during your lifetime. It is basically a vehicle that will protect your legacy until your kids or grand kids receive it.

Protect it from what?

 

[redfish955]

Protect it from what?

I'm not a lawyer but I would guess a number of things. Bad marriage, spoiled kids, etc. You could set it up so that once you pass away all of your direct heirs will split 4% of the funds value upon their 35th birthday. I think it also helps with lawsuits as well.

 

[dpmd]

For it to protect the asset from being considered part of your estate for collecting on a lawsuit and so forth it has to be an irrevocable trust and essentially means you don't own it anymore and any changes (including sale of the asset) has to have the permission of the beneficiaries. Better be damn certain about who you select.

 

[Trismegistus4]

For it to protect the asset from being considered part of your estate for collecting on a lawsuit and so forth it has to be an irrevocable trust and essentially means you don't own it anymore and any changes (including sale of the asset) has to have the permission of the beneficiaries. Better be damn certain about who you select.

Last year I went to a conference and they had a representative from one of these "asset protection" firms come in and do their sales pitch. He did mention irrevocable trusts but also the general gist I got was that asset protection is really about asset hiding. That is, somehow, you can prevent the court during the discovery process from finding out that you own this, that, or the other thing. But is that really true? Let's say you have assets owned by a non-irrevocable trust. If they do a real estate search and don't find any real estate owned by you, can't they find out where you live, look up who owns the house, find that it's Foobar Trust, Ltd., and then find out who's behind the trust? I find it hard to believe that who's behind a trust is such protected information that it can't even be subpoenaed in a lawsuit.

 

[dpmd]

Last year I went to a conference and they had a representative from one of these "asset protection" firms come in and do their sales pitch. He did mention irrevocable trusts but also the general gist I got was that asset protection is really about asset hiding. That is, somehow, you can prevent the court during the discovery process from finding out that you own this, that, or the other thing. But is that really true? Let's say you have assets owned by a non-irrevocable trust. If they do a real estate search and don't find any real estate owned by you, can't they find out where you live, look up who owns the house, find that it's Foobar Trust, Ltd., and then find out who's behind the trust? I find it hard to believe that who's behind a trust is such protected information that it can't even be subpoenaed in a lawsuit.

I am sure it can be found, but if it is in an irrevocable trust you don't own it and aren't the beneficiary so they can't touch it (there are versions where you are a partial beneficiary in which case they can come after your percent of interest in the asset)

 

[DokterMom]

Last year I went to a conference and they had a representative from one of these "asset protection" firms come in and do their sales pitch. He did mention irrevocable trusts but also the general gist I got was that asset protection is really about asset hiding. That is, somehow, you can prevent the court during the discovery process from finding out that you own this, that, or the other thing. But is that really true? Let's say you have assets owned by a non-irrevocable trust. If they do a real estate search and don't find any real estate owned by you, can't they find out where you live, look up who owns the house, find that it's Foobar Trust, Ltd., and then find out who's behind the trust? I find it hard to believe that who's behind a trust is such protected information that it can't even be subpoenaed in a lawsuit.

If you are a physician and live in a house, the baseline assumption is that you own it. If the house you live in is owned by a trust, that's a big red flashing sign that you are attempting to hide your assets, and if I were a lawyer on the other side, I'd for sure go hunting.

You want to hide assets? Don't be obvious that you're hiding them.

 

[Trismegistus4]

If you are a physician and live in a house, the baseline assumption is that you own it. If the house you live in is owned by a trust, that's a big red flashing sign that you are attempting to hide your assets, and if I were a lawyer on the other side, I'd for sure go hunting.

You want to hide assets? Don't be obvious that you're hiding them.

That's what I would assume, but this guy was talking as though it was easy to hide your assets, which is why I'm trying to find out if there's any validity to that.

 

[DokterMom]

That's what I would assume, but this guy was talking as though it was easy to hide your assets, which is why I'm trying to find out if there's any validity to that.

Much as I hate to suggest it, I'd consult a divorce attorney...