After a person dies, family members typically go through the long, complicated probate process to decide the fate of the individuals assets. A trust explains how assets are to be distributed, but the process is much quicker since it doesnt involve courts. Putting your home in a trust could make things easier for your loved ones, but there are some drawbacks.
Benefits of Creating a Trust
If you died with only a will, your assets would be distributed through the probate process, which could take a year or longer. Your family members could have to attend several court hearings, which could be expensive and time-consuming. With a trust, your beneficiaries would receive property quickly. If they chose to sell it, they could avoid the complications of probate.
When a person has a will, family members must pay an attorney to guide them through the probate process. With a trust, youd pay an attorney now to set it up, and your family wouldnt have to pay legal fees after your death. If you owned property in other states, a trust could help your family avoid having to hire attorneys in each state.
When courts process a will, the distribution of assets becomes a matter of public record. If youd prefer to keep that information private, a trust could help since it would be handled outside the court system.
Downsides of Putting Property in a Trust
Setting up a trust is much more complicated and expensive than writing a will, especially if you want to use a trust to manage multiple assets. If you put your home in a trust but didnt include other assets, those assets would need to go through probate and might be subject to estate taxes.
Assets need to be titled in the name of the trust so they can go to designated beneficiaries. If you transferred property ownership to a trust, that might cause problems with homeowners and title insurance.
Types of Trusts
With a revocable, or living, trust, you could add or remove assets, change the beneficiaries, or dissolve the trust entirely. You would continue to own and legally control the assets until your death. Since the property would still legally be yours, creditors could seize it upon your death, and it could be subject to estate taxes. If you became incapacitated, someone else could take over as trustee.
With an irrevocable trust, a trustee would become the legal owner of the property and take responsibility for managing it. Assets would no longer be considered part of your estate and wouldnt be subject to estate taxes. An irrevocable trust couldnt be changed once assets were put into it.
Talk to an Attorney
Putting your home in a trust could spare your loved ones the time and cost of going through probate and shield your property from estate taxes and creditors. Discuss your financial circumstances and goals and the pros and cons of a trust with an estate attorney.
This article is intended for informational purposes only and should not be construed as professional or legal advice.
Published with permission from RISMedia.
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