Should you put your house in a trust? For some homeowners, it could be a smart move, but you need to know all the facts. Click through for some insights into this little-known estate planning strategy to see if it’s right for you.
If you have several properties — a vacation home, for instance — your family needs to deal with each state’s probate laws and their required fees, which would mean more problems for them, including hiring attorneys in each state and traveling to each state for court hearings. And this would be the consequence of you having left the houses in a will and not a trust. Trusts can also offer future incapacity protection — another trustee can be selected to manage your trust to protect your home.
Once you have decided to put your home into a trust, know that there are two kinds of trusts to choose from.
Revocable or Living Trust
You can liquify the trust entirely if your circumstances change, and you have complete control over your trust until your death. Your home is still included in your taxable estate at the time of your death, although estate taxes affect relatively few people. Also, a living trust will not protect your assets from being taken by creditors nor protect it from the cost of long-term care.
As the name says, you cannot change this kind of trust, so you won’t be able to take any assets out or even dissolve the trust if you change your mind. This trust can save your family money in taxes after your death, if that is an issue, given that your home may not be included in your estate’s value. Irrevocable trusts can protect assets from creditors — but the courts take a dim view of trusts established for the purpose of defrauding creditors. An Irrevocable Trust can be set up to protect your assets from the cost of long-term care.
Although trusts can be a good move, they come with some caveats that you should consider:
- Pay attention to the properties held — you may want to include more than just your home. You need to be consistent about transferring other possessions to the trust as you acquire them and likewise eliminate those you no longer own or want in the trust.
- If you put just your home in a trust, your other possessions will still undergo probate. This is true whether you have a Will or not.
- Your estate may incur additional expenses as the trust may have to file an income tax return and value assets, so you will need to budget for that.
Deal with your lawyer to understand your options. Laws change frequently, as do your life and financial circumstances, so evaluate your trust every two years. If you think you might benefit from a trust, give us a call.
You can count on Ericson, Scalise & Mangan, PC to provide you with sound guidance and experience in these uncertain times. For assistance with your legal needs, please contact us today at (860) 229-0369, or email us at email@example.com.