Should I Put My Home in a Revocable Trust?

by | Nov 14, 2023 | Trusts | 0 comments

Revocable trusts are primarily designed to facilitate the smooth transfer of assets, bypass probate, and offer incapacity planning benefits.

For some families, a trust can also be a way to ensure a loved one has a place to stay after you die.

What is a Revocable Trust?

A revocable trust, also known as a “living trust,” is a legal arrangement that allows you to transfer your assets into a trust during your lifetime. You can change or revoke the trust at any time while you are alive and mentally competent.

What Are the Benefits of Transferring My Home Into a Revocable Trust?

When a home is placed in a revocable trust, it can be transferred to your beneficiaries after your death without going through the often time-consuming and costly probate court proceedings. In general, probate can take several months to a year and incur costs of about 3% to 8% of the estate’s value.

While you’re waiting on probate, the executor is responsible for maintaining the property (e.g., snow removal, lawn care), paying bills, and securing the home. These expenses can add up, causing challenges and financial burdens for your loved ones.

In contrast, if you put your home in a revocable trust, the home will transfer to your beneficiaries immediately.

Furthermore, avoiding probate preserves the privacy of your estate since probate proceedings are public records, accessible to anyone interested.

How Can I Use a Revocable Trust to Ensure a Family Member Has a Place to Live?

There are a variety of reasons you may want someone to be able to stay in the house during their lifetime.

Let’s imagine Audrey and Tom, a couple in their second marriage. Audrey owns the house, and she wants Tom to be able to live there for the rest of his life. But when Tom dies, Audrey wants her own children to inherit the property.

A trust offers a way to do this, while setting up rules and contingency plans for how to handle expenses like taxes, upkeep, or major maintenance projects.

Can a Revocable Trust Help Protect My Home if I Become Seriously Ill?

If you become incapacitated, your designated trustee can manage the trust’s assets, including your home, on your behalf without the need for a court-appointed conservatorship or guardianship.

Note, however, that a revocable trust does not provide asset protection from creditors or help you spend down your assets to qualify for Medicaid. If those are your goals, an experienced estate planning and elder law attorney can help you identify alternate solutions.

Can I Put My Home in a Trust if I Still Have a Mortgage?

Yes, you can put your home in a trust even if you have a mortgage. Putting the property in a trust will not trigger a “due-on-sale” clause or change the terms of your loan. You’ll still have to keep making payments as usual.

How Do I Put My Home in a Trust?

To put your home in a trust, you’ll need to create a revocable trust agreement with the help of an estate planning attorney.

Once the trust is established, your attorney can help you transfer ownership of your home to the trust and record the deed with your county recorder’s office.

Get Help to Decide What’s Best For Your Estate Plan

Every person’s situation is different, so it’s important to work with a qualified attorney to find out whether putting your home in a revocable trust makes sense for you.

And remember, your life and financial situation will change over time, so be sure to speak with your estate planning lawyer and revisit your plans regularly.

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