A trust can contain different kinds of property and assets , and trust-based estate planning is a good way to provide for your loved ones after you are gone. Many people put their home and other real estate into their trust. Whether putting your home in a trust would be beneficial for you depends on your individual circumstances and can best be determined in consultation with an experienced estate planning attorney, but there are some general advantages and disadvantages that you should take into consideration.
What Are Some Possible Advantages of Putting My Home into a Trust?
Most living trusts are structured to avoid the probate process. Probate is a process that can be lengthy and expensive, and probate can delay the administration of your estate so that your beneficiaries can benefit. The probate process is also public, and generates records that can be accessed by anyone. Putting your house into a living trust will keep it out of probate court, saving time and money and maintaining privacy around your family finances. A trust also allows you to name a trustee to manage the assets in the trust, including your home, should fall ill or get injured. Naming a trustee to help you can add to your peace of mind, knowing that everything will be taken care of even if you are no longer able to manage your finances. Finally, putting your home in a trust can possibly protect it from creditors if the trust is an irrevocable one.
Should I Use a Revocable or an Irrevocable Trust for My Home?
Once you have determined that putting your home in a trust is a good option, you will need to decide whether to use a revocable trust or an irrevocable one. The advantage of a revocable trust is that it can be changed or ended at any time and that the assets within it are still under your ownership. There are certain cases, however, when retaining ownership of the assets such as your home can be a disadvantage, such as when you have a need to protect your assets from lawsuits or creditors. Long-term care is one expense that could completely drain the equity in your house if you retain ownership of it, but if your home is held in an irrevocable trust you no longer own it and a nursing home or medical facility cannot go after it, nor will it be considered as an asset for the purposes of a Medicaid application in certain cases. It is essential that you talk to an experienced estate planning attorney before taking any action and to determine which kind of trust might be best for you.
What Are the Disadvantages of Putting My Home in a Trust?
While the advantages of putting a house into a trust far outweigh the disadvantages in most cases, there can still be some downsides to consider before putting your house into a trust. Any trust will require a significant amount of legal and financial paperwork, and there can be costs to have these documents prepared. Once a trust is set up, there is a need to pay attention to both the trust and the assets and property within it to be sure that all is up to date and accurate. To determine if the advantages of putting your house into a trust are enough to mitigate these disadvantages, it is best to consult with a skilled and knowledgeable estate planning lawyer.