Is it a good idea to title the family home to the spouse with less lawsuit exposure?
Commonly the family residence is titled to the less liability prone spouse.
While this makes the home safer, it has drawbacks. One drawback is that
you can’t be certain that this spouse will remain liability free.
You also run the risk that if you divorce, your spouse may sell or refinance
the home and dissipate the proceeds. To prevent this, you may encumber
the home to an entity that you control. Another disadvantage is that when
marital assets are titled to only one spouse it frustrates good estate
planning. By equally dividing marital assets, you can more tax-efficiently
plan your estate. Finally, creditors of the non-title spouse may argue
that the funds used to buy or maintain the home came from the debtor-spouse,
and therefore, that spouse – and his creditors – has an equitable
interest in the home. For these reasons, titling the home and other marital
assets to the less vulnerable spouse is not always sound planning.