Putting your home in a trust can offer various benefits. Whether you want to avoid probate, reduce estate taxes, or protect your assets, creating a trust can be a wise decision. In this article, we’ll explore the process of putting your home in a trust and discuss the different types of trusts available.
What Is a Trust?
A trust is a legal agreement under which a trustee manages assets on behalf of one or more beneficiaries. Trusts are commonly used for estate planning purposes, as they can help individuals manage and protect their assets.
Types of Trusts
There are two main types of trusts that homeowners typically use to transfer their property: revocable and irrevocable trusts.
With a revocable trust, you retain control over the property and can make changes or revoke the trust at any time. An irrevocable trust, on the other hand, offers more asset protection and can provide tax benefits, but you give up control over the property once it’s transferred to the trust.
What Does It Mean to Put Your Home in a Trust?
Essentially, it involves transferring the ownership of your home from yourself to a trust. The trust then becomes the legal owner of the property, while you still retain the right to live in and use the home as you normally would.
Benefits of Trusts
One primary advantage of putting your home in a trust is reducing estate taxes. If your estate is valued at over a certain amount, it may be subject to federal estate taxes. By transferring ownership of your home to a trust, you may be able to reduce the value of your estate and lower your estate tax liability.
Putting your home in a trust can also protect your assets. If you’re facing a lawsuit or have creditors coming after you, having your property in a trust can make it more difficult for them to access your assets.
Disadvantages of Trusts
There are also some potential drawbacks. For example, transferring ownership of your property to a trust may make it more difficult to refinance or sell the property in the future. Additionally, if you choose an irrevocable trust, you’ll give up control over the property, which may not be desirable for everyone.
How to Place Your Home in a Trust
First, you’ll need to choose the type of trust that’s right for you. As we mentioned earlier, revocable trusts offer more flexibility and control, while irrevocable trusts offer more asset protection and tax benefits. Once you’ve decided on the type of trust, you’ll need to create the trust document and transfer ownership of your property to the trust.
Transferring ownership of your home to a trust typically involves hiring an attorney and paying fees for the transfer. You’ll also need to update your property’s title to reflect the trust as the new owner.
Selecting a Trust
A revocable trust may be a better fit if you want more flexibility and control over your assets during your lifetime, while an irrevocable trust can offer greater asset protection and tax benefits. It is important to consult with a qualified estate planning attorney who can guide you through the process and help you choose the best trust for your specific needs.
