It's often wise to title your home to a Single-Member Limited Liability Company (LLC) because the home titled to the LLC avoids a judgment creditor's attachment from clouding the home's title.
The limited liability company and family limited partnership can both protect assets. But we wouldn't ordinarily title the home to a family limited partnership or multi-member limited liability company (though some asset protection planners do title the family residence to a limited partnership). The downside is that you lose your home ownership tax benefits that you keep if you title your home to a single-member limited liability company which is a disregarded entity for tax purposes. The limited partnership is not.
A single individual has $250,000 capital gains tax exclusion on realized profits when they sell their home. If you title your home to a family limited partnership or multi-member LLC for more than 3 out of 5 years, you'll lose your homeowner tax benefits. You could transfer your home to a family limited partnership for less than 3 years and then retransfer your home back into your own name for at least 2 years, but this can be impractical and expensive.
The better alternative: title your home to a single-member limited liability company. If you're married, the less-liability prone spouse may be that single-member. Since the IRS disregards single-member limited liability companies for tax purposes, the home, for capital gains purposes, should be treated as if owned directly by the individual member. You can't use this tax-preservation strategy with a limited partnership, which requires two or more partners and thus is not a disregarded entity. Review this with your tax advisor.
Why do we like this strategy? Suppose a creditor wins a judgment, which, if recorded, would cloud your home's title. If you previously titled your home to the LLC, its title would be unaffected by the filed judgment. The judgment would be against your name as the prior owner. This doesn't necessarily extinguish the creditors' rights as the creditor might try to reverse the conveyance as a fraudulent transfer.
Single-member LLCs are also sometimes liquidated by the courts when the only member is the debtor, but including a second member would lose the LLCs status as a tax-disregarded entity. Therefore, you need careful planning to coordinate your tax and asset protection goals. But generally, if you keep your home equity protected by homestead and mortgages, titling it to a single-member LLC can then keep its title clear of personal judgments filed against you. Remember that a transfer to an LLC may cause you to lose your homestead protection.