You may be wondering whether it’s a good idea to put your home into a trust. In today’s blog, we’re explaining the process of creating a trust and discussing some of its related benefits and challenges.
Creating a Revocable Living Trust
A revocable living trust is a trust a person can create while they are still alive. It’s called a revocable trust because the person who creates it can change the terms at any time; they can even do away with the trust altogether. Once a person establishes the trust, they then need to place their house into that trust. This can be accomplished by re-titling the property, and the owner naming themselves as both the trustee and the beneficiary of the revocable living trust. By serving as both trustee and beneficiary, the original property owner can both maintain and keep control of the home.
Mortgage and Property Tax Exemption
While transferring a house into a trust does change its ownership and title, it should not affect the trustee’s mortgage or their property tax exemption. As long as the property is residential and contains less than four dwelling units, transferring the home into a revocable living trust will not trigger the Due on Sale Clause. Additionally, as long as the homeowner is putting their primary residence into a revocable living trust and are planning to continue residing there as the trustee/beneficiary, they should still be able to claim the homestead exemption on their taxes. (Be sure to check with your county tax office or an experienced estate planning attorney).
Selling a House That’s in a Revocable Living Trust
Another benefit of a revocable living trust is that it’s revocable. The terms can be changed. If the trustee changes their mind and wants to sell the property instead of keeping it in the trust, then they can do that. As a trustee, they have the right to manage and control the property as they see fit. Selling a property that is in a trust is similar to selling a property that is in an individual’s name. An experienced estate planning or real estate attorney can help answer any questions about the process.
Transitioning a Revocable Living Trust
One of the most common reasons why people put their home into a trust is the ease of transition. If the original trustee can no longer manage the trust – because they are incapacitated, or for some other reason – then a named successor or backup trustee can quickly take over the trust. The successor trustee will have the same rights and authority as the original trustee and can manage the property or use the assets to help maintain the original trustee’s general health and welfare. The original trustee can also set specific rules for what they want to happen to the property if they pass away and avoid the home going through probate. The successor trustee must follow those rules and transfer or sell the property as instructed. Because the house would not have to go through the probate process, the transition of control will likely be smoother and completed more quickly.
Have Additional Questions? Call Brian M. Douglas & Associates
If you are considering putting your home into a trust and have questions about the process, please reach out to Brian M. Douglas & Associates. Our team of experienced estate planning and real estate attorneys would be happy to help. Please feel free to call us at (770) 933-9009 or send us a message via our contact page.