Short Answer

In North Carolina, retitling a home into a revocable living trust does not shield it from the homeowner’s creditors. To protect a residence, you must address existing judgment liens, promptly claim any homestead exemption, and ensure any deed to a trust is properly executed and recorded before creditor liens attach. Transfers made after creditors appear can be challenged as voidable, and capacity or court authority is required if the owner cannot sign.

Understanding the Problem

You’re asking whether you can protect a North Carolina home from creditors by “funding” (transferring) it into a trust. The key decision point is whether a deed to the trust—done correctly, by the right person, and at the right time—will keep creditors from reaching the property. Because creditors already hold judgments in this situation, timing, liens, and the owner’s capacity to sign are critical.

Apply the Law

Under North Carolina law, a revocable trust is transparent to the settlor’s creditors: assets in a revocable trust remain available to satisfy the settlor’s debts during life and at death. Irrevocable trusts can offer protection only if established and funded before creditor problems, with the settlor retaining no beneficial access to the transferred assets. A judgment, once docketed in the county where the home sits, becomes a lien on that real estate; a later deed to a trust does not remove that lien. Deeds must be recorded to beat later creditors under the Connor Act. The main forums and offices involved are the county Register of Deeds (recording the deed) and the Clerk of Superior Court (exemptions, guardianship, and related orders). A core deadline: a debtor generally has 20 days after service of notice to claim the homestead exemption.

Key Requirements

• Capacity or authority to sign: The homeowner must have legal capacity; otherwise, a properly authorized agent (power of attorney) or court‑appointed guardian must act, often with court approval for any real estate conveyance.
• Correct deed and recording: Use a valid North Carolina deed transferring title to the trustee and record it with the county Register of Deeds; unrecorded deeds do not defeat later creditors.
• Type of trust matters: A revocable trust does not protect the settlor’s home from the settlor’s creditors; only a properly structured and timely funded irrevocable trust can offer protection, and not against existing creditors.
• No existing liens: If a judgment lien is already docketed against the property, a later transfer to a trust will not clear that lien.
• Fraudulent transfer risk: Transfers made after creditor claims arise can be set aside if they hinder, delay, or defraud creditors or leave the debtor insolvent.
• Use exemptions and existing shields: Promptly claim the homestead exemption and evaluate tenancy‑by‑the‑entirety protections for married owners; these may provide more immediate relief than a trust transfer.

What the Statutes Say

• North Carolina Gen. Stat. § 36C‑5‑505 (Claims of creditors against settlor) – Property in a revocable trust is subject to the settlor’s creditors.
• North Carolina Gen. Stat. § 39‑23.4 (Voidable transfers) – Transfers made to hinder, delay, or defraud creditors may be set aside.
• North Carolina Gen. Stat. § 47‑18 (Connor Act; registration) – Unrecorded deeds are ineffective against lien creditors and purchasers.
• North Carolina Gen. Stat. § 1C‑1601 (Exempt property; homestead) – Provides the homestead exemption in a residence and other personal exemptions.

Analysis

Apply the Rule to the Facts: Because creditors already have judgments, any liens docketed in the home’s county attach to the property and will not be removed by later moving the house into a trust. If the parent’s trust is revocable and the parent is the beneficiary, the home remains reachable by the parent’s creditors. If the parent lacks capacity, no deed is valid unless made by an authorized agent or court‑appointed guardian, and any transfer now faces heightened risk of being voidable if creditors are already pressing claims.

Process & Timing

1. Who files: Homeowner; if incapacitated, an authorized agent under a durable power of attorney or a court‑appointed guardian. Where: Record deeds at the county Register of Deeds; file exemption claims and guardianship matters with the Clerk of Superior Court. What: Warranty or quitclaim deed to the trustee; AOC exemption forms to claim the homestead; guardianship petition if needed. When: Claim exemptions within 20 days after service of notice from a judgment; record any deed promptly.
2. Title and liens check: Order a title search to confirm any docketed judgments or other liens. If none attach yet, consider whether a transfer is appropriate, recognizing that a revocable trust will not protect against the settlor’s creditors and that late transfers can be voided.
3. Finalize funding and documentation: If proceeding, execute and record the deed to the trustee; obtain and provide a Certification of Trust to third parties as needed; if capacity is lacking and no power of attorney exists, seek guardianship and obtain any required court approval before conveying real property.

Exceptions & Pitfalls

• Revocable trusts do not shield the settlor’s home from the settlor’s creditors; funding one won’t defeat existing judgment liens.
• Transfers after creditors arise can be voided as fraudulent/voidable, especially if they leave the owner insolvent or were intended to hinder collection.
• Capacity issues stop the process; use a properly drafted power of attorney with express authority or obtain a guardianship and court approval for real estate conveyances.
• Unrecorded deeds don’t beat lien creditors; always record promptly in the correct county.
• Judgment liens already docketed attach to the property and remain despite a later deed to a trust; address liens directly (negotiation, payment, or legal challenge).
• Married owners should evaluate tenancy‑by‑the‑entirety and, if appropriate, a qualifying joint trust structure; details are technical and must be done precisely to preserve protections.

Talk to a Estate Planning Attorney

If you’re dealing with creditor judgments and want to protect a North Carolina home, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.