questions & answers

Question: My father in law had a stroke in April of 2013 and has been unable to pay his credit card debts including a home equity line of credit through State Farm. He owns a home here here in Phx but has since been relocated to be with other family members in Napa, Ca. in a group home. He receives his usual SS benefits and a small pension of $120 per month, he is also getting his aid and attendance from the V.A. The problem is this, all of his benefits go to his care and he is unable to pay his credit card debts. Since he is no longer living here we are paying his house payment along with the State Farm home equity line of credit since that is like a second mortgage I believe. My question is how do we keep the house in the family and eliminate his credit card debt? which is probably around $20,000. The house doesn't have any equity in it or if it does, it's not much. Thank You

Answer: Deeding the property to an irrevocable trust may be an option. Whether property that has been deeded to a trust can be reached by creditors will generally depend on whether the trust is revocable or irrevocable. A.R.S. 14-10505. If the trust is revocable, that means that the person who created it, known as the "settlor," has the power to terminate the trust and take the property back. If it is irrevocable, the settlor cannot take the property back from the trust. Under Arizona law, a creditor can usually reach property in a revocable trust, but not an irrevocable trust. However, it is important to remember that the law related to trusts is very complex. Only a licensed attorney who is given the opportunity to review all relevant facts can determine whether property will be subject to the claims of creditors. Please contact an Estate Planning Attorney to determine if an irrevocable trust is the appropriate measure for your circumstance.