Putting your home in a trust can protect your assets and make it easier for your beneficiaries to inherit it. It also avoids probate. This is a smart strategy for safeguarding your property. This guide will help you put your home in a trust.
What is a Trust and Why Put Your Home in One?
A trust is a legal agreement. It involves a trustee who manages assets for a beneficiary. Trusts have many uses. They can protect assets, lower taxes, and make it easier to distribute assets after the person who created the trust dies.
Benefits To Putting Your Home In A Trust
- Avoiding probate. Probate is the legal process of administering a deceased person’s estate. Placing your home in a trust can save time and money for your heirs by avoiding probate.
- A trust can keep your home safe from creditors during bankruptcy or lawsuits.
- Trusts are private documents, so your assets in the trust won’t be public after you die. This includes your home.
- A trust gives you more control over how your assets are managed and distributed than a will.
Types of Trusts
There are two main types of trusts:
- Revocable trusts: Living trusts or Revocable trusts can be modified or revoked by the grantor during their lifetime. An irrevocable trust can protect assets better than this flexible type of trust.
- Irrevocable trusts: Once established, these trusts cannot be changed or revoked by the grantor. They offer greater asset protection but less flexibility.
Deciding on the right type of trust for you depends on your goals and circumstances. Consulting with an estate planning attorney can help you make an informed decision.
How to Put Your Home in a Trust
- Draft a trust agreement: Work with a lawyer to make a trust document that explains who gets what, who manages it, and any special rules. This legal document will serve as the foundation of your trust.
- Transfer ownership of the property: To put your home in a trust, you will need to sign a new deed transferring the property from your name to the trust. To make sure the trust has legal control over the property, it’s required to fund the trust.
- Update insurance policies: If you sell your house, tell your insurance company so they can make sure your policy is up to date. This step is crucial to maintain proper coverage for your home under the trust’s name.
- Be prepared for potential complications: Keep in mind that certain factors may complicate the process of putting your home in a trust. If you have a mortgage on your home, you might have to get permission from your lender before moving it to a trust. If you put your belongings in a trust, remember to consider any taxes or laws that might apply. Consult with your attorney and financial advisors to navigate these potential challenges.
Maintaining Your Trust
- Pick a reliable trustee you trust to handle your assets based on how you want them managed.
- You can choose a backup trustee in case the first one can’t or doesn’t want to do the job.
- Review your trust every five years. This helps make sure it stays relevant to any changes that happen in your life or finances. Make updates as needed.
- Remember to add any new property you acquire to your trust. This includes real estate.
- Make sure to consider income taxes. Ask a tax expert to help you set up your trust in a way that saves on taxes.
