Purchasing a home or refinancing a home are big decisions in your life that take a lot of time and consideration, but the payoff can be immeasurable. Your home is a huge part of your life, and where you will most likely be spending the majority of your time with your loved ones. With that knowledge, you will want to do what you can to protect your home and make sure it stays in the hands of the people that you can trust, even in the event that something unexpected occurs. To do that, one of the best decisions you can make is to put your newly purchased home or refinanced home within a Trust.
Trust & Will, a leader in online estate planning services, knows how important it is to protect such a large and important asset. Your home helps to keep you and your family safe and secure, and we want to help you safeguard that. That is why we are going over everything there is to know about Trusts and when to create one when purchasing or refinancing your home.
Keep reading to learn more about the following:
What is a Trust?
A Trust is a legal arrangement in which you give the responsibility of managing your assets to another party. This third party is known as your Trustee. In your Trust, you will also name the individual or individuals that you want the assets to be passed on to after your death. This person is known as your Beneficiary and will receive the assets within the Trust once you pass away.
A Trust is an important legal document that can help keep your family members from going through probate court proceedings to settle your assets. Probate court is the process that occurs after the passing of an individual who either had a Will or did not have an Estate Plan. In probate court, all assets will be settled and passed on to their new owners. Avoiding probate court is extremely beneficial as probate court can be both time-consuming and costly. This process can often last months or years and can require your family to assume the expense of legal counsel to sift through the process. This will then decrease the amount of money and assets that you will be able to leave your family in inheritance.
It is also important to note that you can make yourself the Trustee of your own Trust, ensuring that you are able to still have full control over your assets until they are passed along to your Beneficiary. However, if you would like to have someone else be the Trustee, this is also an option.
How Do I Create a Trust?
To create a Trust, you will need to decide which assets besides your home you will want to include in the Trust, and decide who you want your Trustee and Beneficiary to be. When deciding who you choose to name as your Trustee, you will want to make sure you have thorough conversations about the responsibility of the role if you choose someone other than yourself. Once you have made these decisions, you will need to create a Trust document, have it signed and notarized, and make sure that your chosen Trustee is in agreement as well.
When to Create a Trust: Purchasing a Home
Once you purchase a home, you will need to decide if putting it within a Trust will be right for you. The biggest question that you will need to consider when making that decision is how much is the home worth? Additionally, how much is the sum of all the assets you want to put within the Trust worth? A Trust is an ideal option to consider for someone who has at least $160,000 in assets. That means that if your total sum of assets equals $160,000 or more or your home is worth at least $160,000 then you will want to consider creating a Trust as it may be a more cost-effective estate planning option for you and an easier way to pass your assets on to your loved ones.
When to Create a Trust: Refinancing a Home
Much like when purchasing a home, you will need to decide how much your assets are worth that you are considering putting within your Trust. Again, if they are greater or equal to at least $160,000, this option may be right for you instead of creating only a Will for these assets.
Often, when it comes to refinancing a home, it is a matter of remembering to return your home to your Trust. It is possible that you already held your home within a Trust but decided that it was time to refinance. Often, when choosing to refinance your home, you may first need to transfer it out of the Trust. This can sometimes lead to you putting off or forgetting to transfer your home back into your Trust, as the responsibilities of our day to day lives are challenging enough! However, in order to get the benefits of your Trust in regard to your home, you will need to make sure to place your home back within the Trust.
Deciding what the best Estate Plan is for you and whether or not you should create a Trust can be a challenging decision, as it will require considerable thought and care to ensure that you are making the best decision possible. Although these decisions can feel daunting, Trust & Will can help you work through these decisions through our free online quiz to get you started. We also offer additional Estate Planning Attorney Assistance for those who feel it may be beneficial. With our online estate planning services, it is easier than ever to create your estate planning documents online once you have made these decisions.
Don’t waste any more time. Even if you’re not sure where to start, consider taking our free online quiz and get started by creating your custom Estate Plan!
Is there a question here we didn’t answer? Reach out to us today or chat with a live member support representative!