Why placing your family home in confidence is a wise move!
In light of this, you want to plan wisely to ensure that your home will be passed on to your heirs in the most efficient and safe manner when you die or if you become incapacitated by illness or injury.
In fact, proper estate planning is as much part of responsible homeownership as having homeowners insurance or keeping your home’s roof well maintained. You have a variety of planning vehicles to choose from when it comes to including your home in your estate plan, but for a variety of reasons, placing your home in trust is often the smartest option.
What is a Trust?
In simple words, a trust is an agreement between the “grantor” (the person who puts assets in the trust) and the “trustee” (the person who agrees to keep those assets) that “for the benefit of Holds the title “Beneficiary.” Now, when the trust is a Revocable Living Trust, this agreement is generally made for your benefit as the beneficiary, between you as the grantor, and you, as the trustee.
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Why would you want to enter into an agreement for yourself, to own the property for yourself, for your own benefit? Well, that’s because by doing so you remove those assets from the jurisdiction of the court when you become incapacitated or when you die, and instead, you take those assets out of the court’s intervention. Without taking over, his successors give the trustee the power to transfer. And keep it completely private. It saves your family significant time, money and headaches.
Benefits of placing your home in trust
While both wills and trusts are the most commonly used estate planning vehicles for transferring property and other assets to your loved ones, placing your home in a trust has several distinct benefits compared to using a will. Huh.
Avoiding Probate
One of the primary benefits of using a trust to assign your home to your heirs is to avoid the court process known as probate. Unlike a will, property held in a trust does not have to go through probate. During probate, the court oversees the administration of the will, ensuring that
Your assets are delivered as you wish, with automated supervision to handle any disputes.
However, probate can be a lengthy and costly process, which can be emotionally exhausting for your loved ones. Depending on the complexity of your estate, probate proceedings can drag on for months or even years, and your family will need to hire an attorney to represent them, which can result in costly legal fees that can liquidate your estate. Is.
Plus, probate is open to the public, which can make things riskier for the people you’ve left, especially if the wrong people take an interest in your family’s affairs. Unlike a will, if your trust is properly established and maintained, your family will not have to go through probate to inherit your home. Instead, your home will pass to your loved ones immediately after your death, without the need for any court intervention. Avoiding probate delays can be especially important when it comes to making sure the property is properly maintained, as the home can fall into disrepair during the completion of probate.
Finally, unlike wills, trusts remain private and are not part of the public record. Therefore, with a properly funded trust, the entire process of transferring ownership of your home can happen in the privacy of your personal family attorney® office, not in the courtroom, and on your family’s time.
protection against disability
In addition to giving your home to loved ones when you die, placing your home in a trust can also protect your home if you become incapacitated by serious illness or injury. Conversely, only a will applies at your death, so protecting your home will be useless if you become incapacitated.
If you become incapacitated with only a will, your family petitions the court to appoint a custodian or guardian to manage the matters related to your homeownership, taking care of the normal maintenance of your home. That includes paying your mortgage and property taxes. and overseeing the sale of your home.
Like probate, the process of petitioning the court to appoint a custodian or guardian can be costly, time-consuming, and stressful. And there is always the possibility that the court may appoint a family member as guardian whom you would never want to manage your family home. Or the court can select a professional guardian, giving a total stranger control over your family’s most valuable assets and leaving it vulnerable to devious guardians, who can potentially sell your home for their personal financial gain. can.
With a trust, however, you can include a provision in the terms of the trust that does not appoint someone you choose to manage the ownership and/or sale of your home as a court heir, if You are unable to do this yourself. For example, your trust may authorize your successor trustee to sell your home to require you to pay the costs of long-term care.
control over asset distribution
Because you can include specific instructions in the terms of the trust as to how and when assets held by the trust are distributed to the beneficiary, a trust can provide more control over how your assets are distributed than a will. is done. For example, you can stipulate in the terms of the trust that assets can only be distributed upon certain life events, such as the end of college or marriage, or when the beneficiary reaches a certain age.
That way, you can help prevent your beneficiaries from blowing through your inheritance all at once, and provide incentives for them to display responsible behavior. And as we mentioned earlier, as long as assets are held in trusts, they are protected from beneficiaries’ creditors, lawsuits, and divorce, which is something else it won’t provide.
avoid family disputes
If you leave your home to loved ones using a will and you designate more than one person to inherit the property, conflict is likely because each person gets an undivided interest in the home. Given this, these individuals must agree on what to do with the home—keep it or sell it—and they may not see face-to-face, which can create unnecessary drama that tears your family apart. could.
For example, if one of your children wants to keep the house and live in it, but the other chooses to sell it to pay off their debts, the child who wants to sell may go to court to force their sibling. could. sell the property. However, this possibility of conflict can be avoided by placing your home in a living trust.
If you name more than one beneficiary for your home in your living trust, you can name a neutral third-party as the successor trustee to determine what happens to the home, and then after a clear determination. Manage post-delivery. For example, the trustee may allow one child to live in the home while another may receive other property assets of similar value, or the trustee may come up with some alternative solution to remove the possibility of conflict.
transfer on death deed
In Wyoming you can transfer ownership of your home to your heirs without the need for probate in what is known as a Transfer on Death (TOD) deed. Initially created as an inexpensive alternative to living trusts, a TOD deed allows named beneficiaries to assume ownership of your home without going through probate or trust administration.
However, TOD deeds come with some major drawbacks, and they can cause unexpected problems for your loved ones. To that end, before relying on a TOD deed as a cheaper alternative to passing your home through the trust, consider the following factors:
- If your property is held as a joint tenancy, on your death your joint tenant becomes the sole proprietor and has complete control of the property, and your TOD deed will not apply.
- Unlike a living trust, a TOD deed cannot be used to manage, sell or borrow assets during your incapacity. This means that if you become disabled, the beneficiary of your TOD deed will not be able to access your home to sell or refinance assets to pay for your care, as your trustee could do if your The property was held in a living trust.
- If the beneficiary of the TOD deed on your death is a minor, a court-appointed guardian will need to be designated to control your assets until the child reaches the legal age. With a living trust, however, the person you named as the successor trustee can manage the assets until your child reaches legal age.
- Using a TOD deed to reduce the value of your property to transfer ownership of your home doesn’t count as a Medicaid spend-down, so it won’t help you qualify for the program. In addition, depending on the state, estate may still be subject to the Medicaid Estate Recovery Program (MERP) after you die.
- Given these potential complications, it’s almost never a good idea to use a TOD deed to transfer ownership of your home as a substitute for a living trust. Instead, your Individual Family Lawyer® can help you find better ways to transfer ownership of your home that will keep your family out of court and out of conflict.
Find the solution that’s right for your family
Although placing your home in a living trust can be an ideal way to give your home to loved ones, each family’s circumstances are different. This is why Your Personal Family Lawyer® will not produce any documents until we know exactly what you need, and what will be the most economical solution for you and your family – both now and in the future – with your family. Based on the mobility of, assets, and desires.
The best way for you to determine whether your estate plan should include a will, a trust, or some combination of the two is to meet with your personal family attorney® for a family wealth planning session, which is Ours is the first step. Life and legacy planning process.
During this process, we’ll take you through an analysis of your assets, what’s most important to you, and what happens to your loved ones when you die or become disabled.
Sitting down with a Personal Family Lawyer® will empower you to feel 100% confident that you have the right combination of estate planning solutions to fit your unique property profile, family dynamics and budget. In fact, we see estate planning as much more than death planning, which is why we call it life and inheritance planning—it’s about your life and the legacy you’re creating by the choices you make today.
Schedule a family estate planning session today to get started!
Bethany Gilson
attorney at Law, Inheritance Law LLC
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