“Though it might not be fun to think about, it’s important to have a plan for what will happen to your home after you die,” Molly Grace of Rocket Mortgage explains. Trusts aren’t just for those with large estates, she adds. For many, their house is their most valuable asset, so having a plan for that asset can make things easier for their heirs, with the transfer of ownership faster and smoother. And, with a revocable living trust, you’re free to make changes or terminate the trust completely.
Especially if the house is the most valuable asset in your estate, tensions among heirs may rise if you leave a house entirely to one person — like if you give it to one child and your other children get nothing. Using a trust can avoid a protracted legal battle, as trusts are not in public records, Derek Silva points out in policygenius.com.
Karen Hube, in AARP, responds to a reader who has “met the new love of my life” asking what they should do about housing costs and living expenses. “And what happens to me if she dies first (the house is in her name)?” Hube’s response: “If your finances permit, you may want to buy half a share of the home.”. Another possibility is for your partner to place the house in a trust, enabling you to continue living there after your partner’s death. Upon your death, it can then go to your partner’s heirs.”
In general, we explain to Geyer Law estate planning clients, each unique situation must be carefully evaluated, so that a customized plan can be developed to secure hard-earned assets and protect loved ones’ well-being. Estate planning, we realize is not only a matter of “who”, but also a matter of what, and for most people, particularly retired people, their biggest “what” is their home. Clients need to consider how the home equity they’ve built up will serve their cash needs in retirement, and whether or not they envision their heirs wanting to someday occupy that very home.
As with so many questions that arise in planning for future contingencies, the answer to whether it’s a good idea for a trust to own your home is – “It depends”!
– by Rebecca W. Geyer
