A key reason why people create an Estate Plan is to ensure that their assets and loved ones are taken care of, both in life and after death. There is peace of mind in knowing that your precious assets will get to the people who will appreciate and take care of them after you're gone.
For many, what happens to the home they spent the best years of their lives in is of utmost importance. To whom you leave your beloved home matters, and so does the way in which you list it in your Estate Plan.
In this article, we will explore many important considerations you should be familiar with when putting your house into a Trust-Based Estate Plan.
What is a Living Trust?
A Living Trust is the cornerstone of your Estate Plan. It allows for the management, control, and distribution of your assets during your life and after death.
A Living Trust can be Revocable, which means that you can change it at any time, or Irrevocable, meaning that it is permanent and cannot be amended or withdrawn. Putting your assets into a Revocable Living Trust allows you to protect what is yours while providing for your loved ones in the future.
Any high-value assets that you own can be added and managed in a Living Trust, including real estate.
Putting Your House in a Trust: What You Need to Know:
The leading reason why someone should put their house in a Trust is to avoid Probate Court. But keep reading to discover further benefits and to understand the probate process.
Probate is the legal process of establishing a Will's validity and settling a Decedent's Estate. A person who writes the Will, or the Testator, names an Executor to begin the process of executing the Estate. The assets laid out in the Will get distributed to the Will's Beneficiaries. A Probate Judge will appoint an Executor if one is not named.
In some cases, Probate Court can be a drawn-out and expensive process. Establishing a Will's validity among family members who are less than amicable can potentially keep a Will in Probate for years. When you put your house in a Trust, you save your loved ones the time, headache, and cost of the Probate process.
When you put your house in a Living Trust, you take on the role of what is called the Settlor, Grantor, or Trustor, depending on your state. You also name yourself as the Trustee, who controls the property and assets listed in the Trust. The Successor Trustee is who will assume control of the Trust after your death. This person takes over the management of your assets, distributing them to their intended Beneficiaries—outside of Probate Court.
A Living Trust is more fluid than a Last Will and Testament. Trusts can change as your life, assets, and relationships do. Whether the value of an asset has changed, you need to add a new one or amend your list of Beneficiaries, a Trust-Based Estate Plan ensures that all of your affairs are in order, no matter what.
Control Your Assets
A Trust allows you to control your assets and their distribution in ways that a Will does not.
A Will includes your final wishes for your possessions, dependents, and arrangements. Because of the way in which the Probate Court operates, a Probate Judge could decide to make changes in how they execute your Will. That means that some Beneficiaries may not inherit what they were owed or even counting on. Because assets in a Living Trust avoid Probate, your house, bank accounts, stocks, bonds, and other cherished possessions can pass seamlessly from you to your loved ones.
When you put your house in a Trust, you maintain complete control over it, just like you do now. You can still sell the piece of property at any time in the future and amend your Trust to reflect the sale. If you purchase a new home, vacation home, or even business, you can add those assets to your Trust—as well as who they should go to—at any time.
Avoid Probate Court
A Living Trust is the most efficient way to pass assets to your heirs after your death.
As we discussed above, putting your assets in a Trust bypasses Probate, saving your loved ones the costs associated with it. Probate Court fees can total up to 3 percent of your asset's value. Depending on how much your home is worth, that can add up. Your Beneficiary's ability to pay the Probate costs can also draw out the process, incurring even more fees.
Avoiding Probate Court can be even more alluring for those wishing to keep their assets private. Probate is public. Because there is no Probate Court process with a Living Trust, there is no need for your assets to be public record, and the contents of the Trust stay between the Successor Trustee and the Beneficiary.
Protection During Illness or Incapacity
Anything can happen, and nothing is guaranteed. Having a Living Trust can protect your family from Conservatorship.
The most widely-known case of Conservatorship is that of Britney Spears, whose father has maintained strict control over her Estate and financial affairs for over a decade. While the matter is a widely-debated topic, it is safe to say that no one wants just anyone presiding over everything they have worked for, especially if they are ill or incapacitated.
A Living Trust protects your best interests if you cannot speak for yourself by allowing you to choose the person who will manage your Estate if you cannot. By having all of your finances, assets, and valuables laid out in your Estate Plan, you are making sure your Power of Attorney has everything they need to make the most informed decisions on your behalf.
Create Your Living Trust, Today!
Living Trusts are easy to set up; you don't even need an attorney to set one up. In fact, you can create a Living Trust online in less than 15 minutes. Trust & Will is the leader in online Estate Planning. Their documents are state-specific, created by expert lawyers, and customized by you.
Trust & Will is the smart, modern way to create, manage, and update your Trust. Get started today!