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CalAttorney2
CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10238
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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I am a married male 57 years old and own a property in

Customer Question

Hi,
I am a married male 57 years old and own a property in California as my single property and I am the sole owner. Recently I put the property in a living trust of which I and my wife are the trustors and trustees .
My wife has taken a loan for 500,000$ from a lender against her personal guarantee.
In case of default can the lender get a court order to hold a lien in the above mentioned Trust property which is owned by me but put in trust.
Thank you
Submitted: 4 months ago.
Category: Business Law
Expert:  CalAttorney2 replied 4 months ago.

Dear Customer,

Thank you for using our forum. My name is ***** ***** I hope to assist you today.

It is very possible that by placing your property into the trust you "transmuted" the property (changed it from a separately owned property into a community property).

This is going to depend entirely on the way the trust is written and the way the title to the property is held. For example, if the title to the property now reads "John and ***** ***** Family Trust" there is a pretty strong argument that the property is now community property and creditors can reach this property for your wife's debt.

If the property's title still reads "***** *****'s as his sole and separate property" but the trust does not distinguish between the two, you are in a sort of legal gray area and it is going to be harder to distinguish.

All of this assumes you and your wife remain married, if the two of you were to divorce this would create a much more complicated scenario in which you would both have to distinguish the nature of your property (as discussed above), and the nature of the debt (this is likely to be deemed a "separate" debt of your wife's).

The attorney that drafted your trust would be the best place to go for an interpretation of these documents - unfortunately this is one of those situations in which an attorney that is drafting a trust for a married couple is actually representing two clients at the same time, and a conflict of interest is readily apparent, for the absolute best representation you would want to speak to your own attorney, but for most purposes simply talking to the attorney that drafted your trust document should be able to assist you.

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