Trusts are legal tools where the trustees hold and manage assets on behalf of the beneficiaries. They are commonly used in estate planning to manage and distribute assets to family members and others. They can help avoid probate, reduce estate taxes, and provide more control over how and when to distribute assets. Trusts can be revocable, meaning they can be modified or canceled, or irrevocable, meaning they cannot change once established.
Benefits of Placing Your House in a Trust
Placing your house in a new or existing trust can offer several key advantages:
- Avoids probate: By placing your house in a trust, it transfers to your beneficiaries without going through probate.
- Privacy: A trust is private, meaning that your estate’s details and the distribution of your assets remain confidential.
- Control: A trust lets you specify how and when to distribute your assets.
- Protection from creditors: Once the house is in an irrevocable trust, it is no longer part of your personal estate, which can protect it from creditors’ claims.
Other details about the new or existing may impact this decision.
Step-by-step process of placing your house in a trust
Here’s a general guide to placing your house in a trust:
- Choose the type of trust: Decide whether a revocable or irrevocable trust best suits your needs..
- Create the document: Work with an attorney to draft the trust. This legal document defines the trust’s terms and identifies the trustee and beneficiaries.
- Transfer the deed: To place your house in the trust, you need to transfer the deed of the property into the trust. This involves preparing a new deed that names the trust as the owner and recording it with the county recorder’s office.
- Notify your mortgage lender: If you have a mortgage on the property, notify your lender about the transfer. Some lenders may require you to refinance the mortgage in the trust’s name.
- Update insurance policies: Ensure that your homeowner’s insurance and any other relevant policies reflect your trust as the property owner.
An attorney can guide the homeowner through this process.
Making the decision
It’s best to consider your specific circumstances and goals. Consider the benefits, such as avoiding probate and protecting your assets, and weigh them against the costs and effort involved in setting up the trust. An attorney can provide additional insight when weighing options.
