Should the home be titled to the less vulnerable spouse?

The family residence is often titled to the spouse who is “less vulnerable”. While this makes the home safer, it has its drawbacks. The reality is that neither spouse is immune to lawsuits. A doctor might be more prone to a malpractice suit than her schoolteacher husband, but he could just as easily be sued for an incident unrelated to his profession.

It is naive to assume that the “less vulnerable” spouse will remain liability free. If you divorce, you risk your spouse selling or refinancing the home and dissipating the proceeds. Encumbering the home to an entity that you control can prevent this.

Another disadvantage to titling the home and other marital assets to only one spouse is that it frustrates good Estate Planning. You can more tax-efficiently plan your estate by equally dividing marital assets.

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 and more, titling the home and other marital assets to the “less vulnerable” spouse is not always sound planning. There are other, better options available to spouses to protect their home and marital assets. For instance, take advantages of states that offer Homestead Protection and Tenancy-by-the-Entirety laws.

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