Living Trust & Liability - Posted by chill

Posted by Laure on April 04, 1999 at 23:43:20:

My question is: If the trustee is sued, is the property in jeopardy?

And, Yes, I believe that all properties in the trust are in jeopardy, but I am not well versed in trusts.

Laure :-0

Living Trust & Liability - Posted by chill

Posted by chill on April 04, 1999 at 20:16:28:

Does a Living Trust provide any type of liability protection for its assets? If a rental property is directly owned and assigned to a living trust, and then someone from the rental property sues, is that property in jeopardy? Does it put other properties within the trust at risk?


Re: Living Trust & Liability - Posted by Bronchick

Posted by Bronchick on April 05, 1999 at 11:58:58:

If the tenant sues the property owner, namely the trust, the trust is liable. Thus all assets owned by the trust (including other properties) are subject to execution to satisfy a judgment.

If you have multiple properties or assets other than real estate in a living trust, it makes more sense to own the assets in multiple liability-protection entities (corporations, LLCs etc), then have the living trust own the interests in the companies (stock certificates or partnership interests).

This way, if property “A” is subject to a liability, the tenant is limited to what is owned by that entity, and other assets owned by the living trust are safe.

Re: Living Trust & Liability - Posted by Bud Branstetter

Posted by Bud Branstetter on April 05, 1999 at 24:11:11:

I want to differentiate between a living trust that is advertised for estate planning and the land trust. The land trust is a form of living trust but functions differently. Each property is titled in the name of its own land trust. By doing this a judgement does not automaticly attach to other property you own. If you had all the properties in the one trust of any type the judgement would attach. If the trustee gets sued it is a simple matter of the beneficiary replacing him so there is not any likelyhood of confusion between the trust and trustee. In the standard living trustee where the beneficiary is the trustee can you fire yourself? I think this type of anonimity and separatability give some liability protection. They should be used with the liability insurance, corporations and limited liability entities to get the most benefits.