If you have heard horror stories about ownership of a home becoming the subject of legal disputes in probate, it is natural to consider ways to avoid this happening with your house after your death. Some families bypass probate by assigning ownership of a residence to a trust.
Placing your home in a trust could potentially make it easier to pass it to a child or another family member, in addition to other possible benefits.
Positives from avoiding probate
Since your home is in a trust, the trustee you appoint has charge over it. As there is no need to go to probate court to pass ownership, your designated heir does not have to wait on a court to approve the transfer.
Additionally, without the involvement of probate, the change of home ownership stays private. Probate assets become public record, but this is not the case when you use a trust. This could prevent legal challenges from a disgruntled family member.
Maintaining control during incapacitation
In the event you become incapacitated due to old age, illness or a medical condition, you may not be able to make financial decisions any longer. By placing your home in a trust, your trustee will keep up your property on your behalf, as well as maintain it for your beneficiary.
Creating legal protections
If you are in a high risk profession or you invest a great deal of your money in business ventures, you could become the subject of lawsuits. If you put your home in an irrevocable trust, creditors may have no recourse to target your home. You could also enjoy estate tax advantages which may help you keep more of your assets for your heirs.
Possible drawbacks of using a trust
Putting your house into a trust could still create some problems. If you place it in an irrevocable trust, you may lose control over your home since you usually cannot alter or abolish the trust. Also, you should have sufficient assets to create and maintain the trust without incurring significant loss.
While transferring ownership of a home to a trust is not for everyone, it remains a useful estate planning tool for people in certain situations. Evaluate your priorities and goals to determine whether a trust may be a beneficial option for your family.
