For most families the home is the biggest asset and the one they'd least like to lose. It's also often the most exposed: owned by the person who signs the business loans, runs the company or carries the professional risk.
This guide explains who can reach your home, the options for protecting it, what each one costs in tax, and the clawback rules that decide whether a change actually holds up. It's general information. Every family's facts are different, and the legal steps are done by a solicitor.
Can creditors take your family home?
If the home is in your name and you become bankrupt, yes. Your interest in the property passes to your trustee in bankruptcy, who can sell it to pay your creditors after the mortgage is repaid. If you own it jointly, the trustee takes your share and can apply to a court to have the property sold. A creditor with a court judgment can also register it against your title before any bankruptcy.
That risk is real for:
- company directors who've signed personal guarantees for business loans, leases or supplier accounts
- sole traders and partners, who are personally liable for every business debt
- professionals such as doctors, engineers, accountants and builders, who can be sued personally beyond their insurance
- directors of companies with unpaid PAYG withholding, GST or super, who can receive director penalty notices
If none of those describe either of you, the home is probably not at much risk from creditors, and the steps in this guide may cost more than they save.
What are the options for protecting your home?
| Option | How well it protects against your creditors | Tax cost | Main catches |
|---|---|---|---|
| Owned by the lower-risk spouse from purchase | Strong | None. Main residence exemption still applies | Doesn't help on separation. Spouse mustn't guarantee your debts |
| Transferred to the lower-risk spouse later | Strong once the clawback period has passed | Stamp duty in many states (some exempt spouse transfers of a home). CGT usually nil if it's always been your main residence | Clawback for up to 5 years, or with no time limit if done to defeat creditors |
| Joint names | Weak. Your half is exposed | None | Your trustee can force a sale |
| Discretionary family trust | Strong, if you don't control it in a way that makes it yours | Usually loses the main residence exemption. Some states charge trusts more land tax | Higher holding costs; family law looks at control |
| Company | Strong against your personal creditors | Loses the main residence exemption; possible Division 7A or fringe benefits tax if you live there | Rarely sensible for a home |
| Super | Protects savings, not the home itself | — | Super can't own the home you live in |
| Insurance and a company to trade | Reduces the chance you'll ever need the rest | Premiums | Doesn't help with guarantees you've signed |
Joint tenants or tenants in common: does it matter for creditors?
Less than people hope. Most couples own their home as joint tenants: when one dies, the other automatically owns it all. Some own as tenants in common in set shares, which pass under each owner's will.
Against creditors, neither form protects the at-risk owner's interest. If a joint tenant becomes bankrupt, the joint tenancy is effectively broken and their share passes to the trustee. A tenant in common's share passes the same way. Either way, the other owner keeps their own share but may lose the home in a forced sale.
Where it does matter is estate planning. If the safe spouse is the sole owner, none of this arises. If you stay joint owners, owning as tenants in common lets each of you leave your share through a will, potentially into a testamentary trust, rather than it passing automatically to a surviving spouse who may be the one carrying risk. Changing how you hold title can attract duty in some states and should be done with your solicitor, alongside new wills.
Why "safe spouse" ownership works best (and when it doesn't)
Holding the home in the name of the spouse who doesn't carry risk is the simplest, cheapest protection. The home isn't the at-risk spouse's property, so it isn't available to their trustee in bankruptcy. Because an individual owns it and lives in it, the main residence CGT exemption still applies when you sell. Our main residence exemption guide explains how that works.
It stops working when:
- The safe spouse signs a guarantee or becomes a co-borrower on the business loan. Banks often ask. If they sign, the home is exposed to that debt. This is the single most common way the protection is undone.
- The home secures the business loan. A mortgage over the home for business debt gives the lender direct access, whoever owns it.
- The safe spouse takes on risk later: starts a business, becomes a director, joins the at-risk spouse's company board.
- You separate. Family law looks at the whole property pool, whoever's name is on the title. Protection from creditors is not protection from a property settlement. See our guide to trusts and family law.
- The safe spouse dies and their will leaves the home straight back to the at-risk spouse. A testamentary trust in the safe spouse's will can keep the protection going. Our testamentary trusts guide explains how.
What if you transfer an existing home to your spouse?
You can, but timing and paperwork decide whether it holds up.
The clawback timeline
The Bankruptcy Act lets a trustee reverse transfers made for less than market value before bankruptcy. A transfer to your spouse is a transfer to a related party. In simplified terms:
| When you go bankrupt after the transfer | What the trustee can do (transfer for less than market value) |
|---|---|
| Within 4 years | Reverse it |
| Between 4 and 5 years | Reverse it, unless you prove you were solvent when you made the transfer |
| More than 5 years | This rule no longer applies |
| Any time, if the main purpose was to keep the home from creditors | Reverse it. There's no time limit. A transferee who paid market value in good faith is protected |
Two things follow.
- Do it early, while nothing is wrong. A transfer made when debts are already looming, or when you're insolvent, is exactly what the no-time-limit rule targets.
- Keep proof you were solvent. If you haven't kept proper books and records, the law presumes you were insolvent at the time. Up-to-date financial statements, a clean ATO account and a solvency record at the transfer date are what rebut that.
The costs
- Stamp duty. Some states exempt or reduce duty on transfers of the family home between spouses; others charge duty on the value transferred. Our state taxes service covers each state.
- CGT. If the home has been your main residence the whole time you owned it, the transfer is usually CGT-free. If it was ever rented out or used for business, part of the gain may be taxable.
- The lender. You'll usually need the bank's consent or a refinance, and the bank may ask both of you to stay on the loan.
- Legal costs for the transfer and, ideally, a fresh will for both of you.
Worked example: a director and a teacher
Hypothetical, rounded figures, for illustration only.
Jordan is the director of a building company and has signed personal guarantees for the company's equipment finance and two supplier accounts. Casey is a teacher. They own their home jointly: worth $1.8 million, with $600,000 owing.
As it stands, if Jordan's company fails and the guarantees are called, Jordan's half of the equity, about $600,000, is available to Jordan's creditors, and the trustee can force a sale of the home to get it.
Option 1: Transfer Jordan's half to Casey now. The transfer is for no value, so it's a related-party transfer for less than market value. CGT is likely nil, because it's always been their home. Duty depends on their state. Before signing, we'd prepare a solvency record for Jordan (financial statements, ATO account, the company's position), and Casey would come off any business debt. If Jordan became bankrupt within four years, the trustee could reverse it. Between four and five years, the solvency record would be the defence.
Option 2: Leave the title alone and reduce the risk instead. Insurance, tighter credit terms, replacing guarantees where suppliers allow, and keeping the company's BAS and super payments current. Cheaper, and sometimes enough.
Option 3: Both, with new wills so the home doesn't return to Jordan outright if Casey dies first.
In practice, we model the numbers and the risk, and the solicitor acts on the transfer and wills.
Should a family trust own your home?
Usually not, but sometimes. A home owned by a discretionary trust isn't the property of any family member, so it's out of reach of each person's creditors, provided control of the trust isn't treated as ownership. The costs are significant:
- No main residence exemption. The trust pays CGT on growth when the home is sold.
- Land tax. Several states charge trusts land tax with a lower threshold or a surcharge, and the home doesn't get the usual principal place of residence exemption when a trust owns it, except in limited cases.
- Moving an existing home into a trust is a sale for CGT and stamp duty, and is subject to the same clawback rules.
There are technical ways to keep the main residence exemption for a trust-owned home: a long-term lease or life interest held by the person living there, or a right to occupy granted by a will. They trigger their own tax and duty consequences and need specialist legal and tax advice. They can make sense for a high-risk family buying a new home; they rarely make sense for moving an existing one.
How super fits in
Super is protected from creditors in bankruptcy, provided contributions weren't made with the main purpose of defeating creditors. A steady pattern of contributions while solvent holds up; a large one-off contribution when trouble is coming doesn't. Super can't own the home you live in, but if you receive a protected super lump sum and buy a home substantially with it, the home can also be protected, as long as the money is clearly traced through a separate account. See our page on super contribution caps, and speak to a licensed financial adviser about contribution strategy.
Mistakes we see
- The safe spouse signs the bank guarantee. The protection is gone the moment they sign.
- Transferring the home after the company is already in trouble.
- No records proving solvency at the transfer date.
- Mixing money. Using the business overdraft to pay the home loan blurs who paid for what.
- Forgetting the wills. The home goes back to the at-risk spouse when the safe spouse dies.
- Buying a gift-and-loan-back scheme that a court will look straight through.
- Assuming the title decides a separation. It doesn't.
- Moving the home into a trust without pricing the lost main residence exemption and the land tax.
What to send us
- A title search or the names on your title, and when you bought the home
- Your mortgage details, including what the mortgage secures
- Every personal guarantee either of you has signed
- Your latest business financial statements and ATO account position
- Any trust deeds and both of your current wills
How BPAG helps
We map whose name everything is in and where the risk sits, model the stamp duty, CGT and land tax of each option, prepare the solvency records that make a transfer stand up, and brief your solicitor on the transfer, wills and any trust documents. Our state taxes agent works through the duty and land tax for your state, and our CGT agent checks the main residence position; a qualified accountant reviews both before you see the advice. For the wider picture, start with our asset protection strategies guide or our asset protection service. We work with a lot of medical professionals on this; see our page for doctors and medical practices.
Frequently asked questions
Can creditors take my house if it's in joint names?
They can take your share. In bankruptcy your interest in the home passes to your trustee, who can then force a sale and take your share of the proceeds after the mortgage. Your co-owner keeps their share, but they may lose the house itself. A joint tenancy doesn't protect your half from your trustee.
If I put my house in my wife's or husband's name, is it safe from my creditors?
Safe from your creditors, yes, if it was done properly and long enough ago, and they haven't guaranteed your debts. It's not safe from your spouse's own creditors, and it doesn't change how the home is treated if you separate. A rushed transfer when debts are looming can be reversed.
Does a family trust lose the main residence exemption?
Generally, yes. The exemption is for individuals, so a home owned by a discretionary trust usually pays CGT on its growth when sold, and some states charge trusts more land tax. There are narrow exceptions, such as a long lease or a right to occupy under a will, but they're technical and need legal advice.
Can I use my super to protect my home?
Not directly. Super can't be used to own the home you live in. What super can do is protect savings from creditors in bankruptcy if contributions were made in a normal pattern while you were solvent. A home bought largely with protected money, such as a super lump sum, can also be protected if the money is clearly traced.
Will a binding financial agreement protect my home from creditors?
No. A binding financial agreement deals with how property is divided between you and your partner if you separate. It does nothing about outside creditors. It can, however, be part of making sure a home held by one spouse for protection is dealt with fairly between you.
Should I mortgage my home to my own family trust to protect it?
Be very careful. Arrangements where a trust 'lends' you your own equity and registers a mortgage, with no real money moving, have been struck down by courts and are exposed to bankruptcy clawback. A genuine loan of real money on commercial terms is different, but get independent advice before signing anything.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.