If I put my money and a home into a revocable trust, can creditors still take it? – North Carolina

Short Answer

In North Carolina, putting money or a home into a revocable trust usually does not protect those assets from the person’s creditors during life. A revocable trust is designed mainly to manage assets and avoid probate, not to create a wall against creditor collection. Also, moving assets into a trust to keep them away from creditors can trigger a claim that the transfer was improper under North Carolina’s voidable transaction laws.

Understanding the Problem

Under North Carolina estate planning, the key question is whether a person can place cash and a home into a revocable living trust and still keep those assets out of reach if a creditor later tries to collect a debt. The decision point is simple: if the trust can be changed or revoked by the person who created it, does that change what a creditor can reach while that person is alive?

Apply the Law

North Carolina generally treats a revocable trust as an arrangement where the person who created the trust keeps practical control. If the person can revoke the trust and take the assets back, creditors typically argue they should be able to reach those assets just as if they were still titled in the person’s individual name. Separately, North Carolina law allows creditors to challenge transfers made to hinder, delay, or defraud creditors, including transfers made as part of “planning” if the surrounding facts show improper intent or the transfer leaves the person unable to pay debts.

Key Requirements

Revocability and control: If the person who created the trust can revoke it, amend it, or pull assets back, the assets are usually treated as still available to satisfy that person’s debts.
Type and timing of the creditor claim: A creditor may pursue collection through ordinary judgment enforcement, and may also attack certain transfers into a trust if the transfer was made under suspicious timing or circumstances.
No improper transfer: Moving assets into a trust does not erase existing creditor rights, and a transfer made to put assets beyond reach can be challenged and potentially undone.

What the Statutes Say

N.C. Gen. Stat. § 39-23.4 (Transfer voidable as to present or future creditor) – Allows a creditor to challenge a transfer made with intent to hinder, delay, or defraud creditors, or made without reasonably equivalent value under certain financial conditions.
N.C. Gen. Stat. § 39-23.5 (Transfer voidable as to present creditor) – Allows a present creditor to challenge certain transfers made without reasonably equivalent value when the debtor was insolvent or became insolvent because of the transfer.

Analysis

Apply the Rule to the Facts: The facts describe an older adult moving to North Carolina and expecting to receive a significant amount of money. If that money and a home are placed into a revocable trust that the person can change or revoke, the trust usually does not add meaningful creditor protection during life because the person still effectively controls the assets. If there are existing or looming debts, transferring assets into a trust close in time to collection activity can also create risk that a creditor challenges the transfer as voidable under North Carolina law.

Process & Timing

Who files: typically the creditor. Where: usually North Carolina state court (often Superior Court) in the county tied to the debtor, the property, or the underlying lawsuit. What: commonly a lawsuit for the debt (if not already obtained), followed by judgment enforcement steps; in some cases, a separate claim to set aside a transfer as a voidable transaction. When: timing depends on the debt and the creditor’s enforcement posture; transfers made when a lawsuit is threatened or pending can draw extra scrutiny.
Next step: if the creditor obtains a judgment, the creditor may use post-judgment collection tools and may also seek court orders aimed at trust-held assets if the trust is revocable or if the transfer is challenged as voidable.
Final step: if the creditor succeeds, the court can allow collection against reachable assets and, in a voidable transfer case, may allow remedies that effectively unwind or neutralize the transfer to the extent needed to satisfy the claim.

Exceptions & Pitfalls

“Revocable” is the pitfall: Many people assume “trust” means “protected.” A revocable trust is usually about management and probate avoidance, not creditor protection during life.
Transfers that look like hiding assets: North Carolina’s voidable transaction rules focus on intent and financial impact. Transfers to an “insider,” transfers where the person keeps control, or transfers made after being sued or threatened with suit can create major risk. See N.C. Gen. Stat. § 39-23.4.
Home title and ownership form: Creditor exposure can change depending on how the home is titled (for example, sole ownership versus certain forms of co-ownership). Deeding a home into a trust can also have side effects that should be reviewed before signing and recording a deed.

Conclusion

In North Carolina, placing money and a home into a revocable trust usually does not keep creditors from reaching those assets during life, because the person who created the trust typically keeps the power to revoke it and reclaim the property. Transfers into a trust can also be challenged if they were made to hinder, delay, or defraud creditors or if they leave the person unable to pay debts. The next step is to review the debt picture before transferring assets, especially if collection activity is pending or threatened.

Talk to a Estate Planning Attorney

If you’re dealing with concerns about creditors and whether a revocable trust will actually protect money or a home, our firm has experienced attorneys who can help explain options and timelines under North Carolina law. Call us today at [CONTACT NUMBER].

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.