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Let's say someone sues our small HOA for more than the HOA insurance will cover (for something that happened in the common area), and not finding enough, sues each owner for the rest. Would my assets be protected because it's in a trust?

Let's assume it was an issue of negligence and not criminal. Location is Idaho.

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  • A trust protects from if you are personally sued. If the homeowner is sued (the trust) it's no help. This is the same as if someone were injured on your property.
    – Tiger Guy
    Commented Jun 27, 2022 at 13:26
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    @Tiger Guy What's the difference between being personally sued and the homeowner is sued? Thanks.
    – Steve
    Commented Jun 27, 2022 at 14:11
  • the difference is that if the trust is the homeowner then the trust can be sued.
    – Tiger Guy
    Commented Jun 27, 2022 at 16:21
  • @Tiger Guy Is this true throughout the USA, including specifically ID? How would I find that statute online? Thanks!
    – Steve
    Commented Jun 27, 2022 at 17:10

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First of all, usually negligence by an HOA or its agents does not create liability for owners of the HOA directly.

Instead, it creates a debt of the HOA, which the HOA might choose to pay through assessments on individual owners.

But, the creditor probably doesn't have the right to compel the HOA to make those assessments, although they could starve the HOA of funds needed to operate and the creditors might be able to seize common interest property management by the HOA (depending, in part, on some quite subtle details of how the association has been set up that have varied, mostly as as matter of customary practice that changes in different time periods - in some HOAs, common interests are owned by the HOA, in others they are tenancy-in-common interests of the owners with limitations on transferability).

Second, self-settled trusts (i.e. trusts for you benefit funded with money from you) are almost always ineffective (outside some select asset protection oriented jurisdictions of which Idaho is not one) as they are a form of fraudulent transfer. So, no it wouldn't work.

In particular Idaho Statutes § 15-7-502(4) states:

If a person is both a settlor and beneficiary of the same trust, a provision restraining the voluntary or involuntary transfer of the settlor’s beneficial interest in such trust does not prevent the settlor’s creditors from satisfying claims from the settlor’s interest in the trust estate that relates to the portion of the trust that was contributed by the settlor.

The same subsection clarifies that federal rules related to grantor trusts are not relevant to this determination, and other parts of the statute also clarify the relevant definitions.

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  • I've had my trust for a long time, and added my ID home as a matter of course. That was long before I learned that the HOA, due to no fault of my own, probably does not have sufficient insurance.
    – Steve
    Commented Jun 27, 2022 at 18:59
  • @Steve Self-settled trusts aren't effective against creditors no matter how hold they are in most cases (absent certain statutorily defined exceptions like certain Medicaid qualification trusts).
    – ohwilleke
    Commented Jun 27, 2022 at 19:02

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