Secure your family's future through home trusts and estate planning.
Today, we’ll delve into a critical but often overlooked topic for homeowners: placing your home in a trust. We’ll shed light on the significance of trusts, aiming to provide clarity on this complex but essential topic. A quick note before we delve in: while we’re not legal experts, our aim is to offer insights rather than legal advice.
Surprisingly, many homeowners don’t fully grasp what a trust is and its significance in securing their family’s financial future. Leaving your home and assets unprotected can lead to various challenges for your loved ones. Essentially, a trust is a legal entity that allows property to pass from the creator of the trust to the intended beneficiary. The trustee oversees the trust, managing the assets on behalf of the beneficiary. There are various types of trusts, but the crucial ones for estate planning are revocable and irrevocable trusts.
Let’s start with the revocable trust, also known as a living trust. It can’t be revoked during your lifetime. You retain control over assets and can make changes or terminate it. Upon your death or incapacitation, it becomes irrevocable, and a successor trustee manages it according to your instructions.
“Putting a house in a trust primarily aims to bypass probate.”
Revocable trusts, however, might still be subject to estate taxes and don’t shield assets from creditors. On the other hand, an irrevocable trust, once executed, cannot be changed or terminated. By placing assets in this trust, you forfeit ownership, which can protect them from estate taxes and creditors.
Despite the benefits, consider the implications of no longer legally owning assets in a trust. Putting a house in a trust primarily aims to bypass probate. When you pass away, your assets typically go through probate, a legal process where debts are settled, and assets are distributed according to your will or state laws if you don’t have one.
Probate can be time-consuming and expensive, lasting from several months to years, especially for complex estates or contested wills. Placing your home in a trust can simplify and expedite the inheritance process by avoiding probate. Before proceeding, ensure your mortgage is settled, as refinancing might be necessary before placing the home in a trust.
If you’re considering setting up a trust, consult an attorney. If you need guidance, we can connect you with our trusted estate planner. For more information about this topic, call or email us. We hope this information clarifies the importance of trusts.
