New Creditor Protections for NC Properties
Effective January 1, 2015, property owned by married couples in North Carolina will enjoy creditor protections afforded to tenancy by the entireties property even if the property is transferred to one or more trusts. Under North Carolina law, real property held by a husband and wife as a tenancy by the entireties is protected from the creditors of each individual spouse, who cannot force a sale of the property to pay a debt. A tenancy by the entireties is created by a deed of real property to a husband and wife; this form of ownership generally has been considered to be terminated when the tenancy by the entireties property is transferred to one or more revocable living trusts owned by the husband and/or wife. Thus, though transfer to one or more revocable living trusts might allow the spouses to retain control over the property, since the trust is considered the owner of the property, the protections afforded to tenancy by the entireties property no longer apply.
- The couple remains married
- The property continues to be held in trust
- The spouses remain the beneficial owners of the property.