Legal Question in Real Estate Law in California

Generally speaking, if someone places his property into a revocable trust, it is not protected from creditors. If the trust is irrevocable, whether the creditors can reach the trust property will depend upon other facts and circumstances. However, more often than not, the transfer into trust can be attacked in court under the Uniform Fraudulent Transfer Act, Civil Code sections 3439 - 3439.12.

It sounds like the father is a guarantor for the son's loan. If the son defaults on the loan, the lender can look to the guarantor as additional security. If the lender first forecloses nonjudicially, the general rule is that the lender cannot recover from the guarantor under the doctrine of estoppel. "We hold tha the creditor cannot recover from the guarantor the unpaid balance upon the note following the creditor's nonjudicial sale of the security." (Union Bank v. Gradsky (2nd Dist. 1968) 265 Cal.App.2d 40.)

The lender can evade this, however, if the guarantor signed a properly worded "Gradsky" waiver.

In addition to what Mr. Whipple stated about the Uniform Fraudlent Transfer Act, the typical revocable living trust wherein the trustor is the lifetime beneficiaries and retain the power to revoke, amend and invade the principal of the trust provides no protection whatsoever against the creditors of the trustor.