If you own a home in the State of Georgia, you know that homeownership comes with a lot of responsibility. During any given year, there are dozens (if not hundreds) of small and large decisions that you make to protect and preserve your home. From changing air filters to updating the landscaping to remembering to file for the Georgia Homestead Exemption, homeownership takes a lot of planning and organization.
Although many of the homeowners we encounter at Brian M. Douglas & Associates are capable, well-organized individuals, we notice that all too many have not considered how to protect and preserve their homes after they are unable to care for them.
There Will Come a Day When You Can’t Do it On Your Own
For many, a home is one of the largest — if not the largest — asset they own. We take pains to place money into retirement accounts and insure against losses, why wouldn’t we do the same thing with such an important asset? There will come a day when we just can’t manage our homes on our own. What will happen then? Hopefully, our homes pass down to our heirs, helping them build wealth of their own. However, this kind of result likely won’t occur without some planning. Let’s take a look at what happens to homes after we are unable to care for them.
Inability to Care for Your Home Due to Incapacity
There are all kinds of reasons why people reach a point when they can no longer take care of their homes. Illness, injury, and aging can cause incapacity temporarily or permanently, quickly or over a long period of time. Who will care for the house if you are unable to do so? Who is empowered to pay the mortgage, contact the utilities, even put the house on the market? Power of Attorney is a legal document that allows you to appoint a trusted individual to take care of financial and legal matters on your behalf. In circumstances when you need help with your house, a Power of Attorney is essential. As a homeowner, it’s important that a Power of Attorney is a part of your comprehensive estate plan. A Revocable Living Trust is also a way to ensure that your home is cared for if and when you are unable to do so (explained in more detail below).
If You Pass Without a Will
Of course, a will is another key part of a comprehensive estate plan. Without a will, your home will pass through probate according to the Georgia State Laws of Intestacy. That means that the default laws about who inherits your house will determine how it is passed down. It also means that your home will necessarily pass through probate, the court process through which assets are gathered, creditors are paid, and the remainder is distributed to heirs.
Even a Will May Not be Enough
Even with a will, your home may still need to pass through probate. All that a will can do in this regard is name the person(s) that you want to inherit the home. The probate process is long, expensive, public, and not ideal for transferring real estate. Why? Because before your chosen heir can take possession of the house and move in, renovate, or sell it, they will have to
- Hire an attorney to help move through the probate process
- Initiate probate proceedings in court
- Make the will and any assets known as a part of the public court record
- Publish the opening of the estate to any and all creditors who may have an interest in your assets
- Wait a period of 12-18 months for the probate process to complete
- Travel back and forth to court throughout that time period
- Pay all taxes, court costs, legal fees, debts, etc.
Then, and only then, if the house did not need to be liquidated to cover outstanding debts, can the heir take possession of the home.
If You Want to Retain Control, Transfer Using a Trust
A Revocable Living Trust is an excellent way to keep a home out of probate and ease the stress, time, and financial burden on your heirs. That’s why we love to incorporate an RLT into a comprehensive estate plan. An RLT can
- Transfer the home outside of the probate process.
By placing real estate ownership into a trust, the home becomes a non-probate asset. The house will not be included in your probate court proceedings. This avoids the need to publish information about the house in the public court record, as well as unnecessary court costs and legal fees. The home will pass to your designated heirs in accordance with your trust instructions, not after a long probate period.
- Allow you to protect and preserve the home for minor children.
If you have minor children that you would like to be the beneficiaries of your home, an RLT is strongly suggested. Why? Because, without an RLT, your home will pass through probate and be released to your heirs on their 18th birthdays. We don’t know about you, but we have noticed homeownership tends to take a little more maturity and experience than typical late teens possess. An RLT allows you to be more specific about when, how, and to whom your real estate is released. You can set a higher age limit, educational requirements, etc. that your children must reach before taking ownership of the house. In the interim, however, the house can be managed and made available for your children’s use by a named trustee.
- Provide for the home in the case of your incapacity.
As stated above, if you are unable to care for your home due to illness, age, or injury, you will want to name someone who can step in to provide legal and financial representation. While a Power of Attorney is still important, a trust can actually name the person(s) who can take on this role if you are incapacitated. Further, this trustee will be bound to follow any instructions you layout as a part of the trust, as opposed to a Power of Attorney (which simply names the individual who has discretion to take care of your affairs).
- Shield the home from your (and your heirs’) creditors.
If you place your home into an RLT while you are alive, this doesn’t provide any immediate protection from creditors. However, once you pass, the RLT becomes irrevocable. This can shield your home from the reach of creditors. If you choose to keep the home in the trust for the benefit of your heirs, their creditors may also be unable to reach the home.
- Avoid ancillary probate requirements.
Probate in any state can be challenging, but going through probate in more than one state is unduly burdensome — and unnecessary. If you own property in more than one state, an RLT is essential.
Contact Brian M. Douglas & Associates to Learn More
If you own real estate (especially real estate in multiple states) and you are interested in learning more about revocable living trusts, feel free to give us a call. Our experienced estate planning attorneys would be happy to discuss your options with you and determine whether a revocable living trust is right for you.