Smart Economics: Why it is wise to put your family home in a trust
While you should always consult your Lawyer to determine the best estate planning strategies to suit your specific circumstances, this blog will discuss trusts (irrevocable and revocable) and outline the expected benefits of trusts to pass your home on to your loved ones.
Proper estate planning is just as crucial as home ownership. There are many options for including your house in your estate plan. However, trusting your home to someone else is often the best option. Your home is most likely the most important and prized asset in your family if you’re like most homeowners. You should plan carefully to ensure that your home passes to your heirs as quickly and safely as possible in the event of your death or incapacitated.
Types and Trusts
You can choose from many trusts, but when it comes time to pass your home on to your heirs, the most popular trusts are an irrevocable trust and a revocable trust.
What is a Trust?
In its simplest form, a trust is an agreement between the Grantor (the person who places assets into the trust) or the trustee (the person who agrees that those assets will be held) for the benefit and benefit of the Beneficiary. What’s the point of agreeing with yourself to own assets? It’s because you can remove assets from the court’s jurisdiction in the event of your incapacitated death or disability. Instead, you grant the power to transfer assets to your successor Trustee. This will allow you to keep everything private and avoid any government intervention. This will save your family time, money, headaches, and a lot of hassle.
Irrevocable Trust
An irrevocable trust, unlike a revocable living estate trust, is irrevocable. The trust terms cannot be modified and cannot be terminated after it has been executed. You give up all rights to assets when you transfer them into an irrevocable trust. The trustee you have designated takes full control of assets that are transferred into the trust’s name. You no longer own trust assets, and they are not considered part of your estate and will not be subject to estate taxes. Assets transferred into the trusted name usually won’t be subject to estate taxes.
While it may seem like an enormous benefit to avoid estate taxes and protect yourself from creditors and lawsuits, irrevocable trusts can be very complex and have some severe restrictions. You can’t modify the terms of an irrevocable trust or end it, which means that you don’t own the assets in the trust. It is best to seek legal guidance from a specialist in asset protection. These are just a few of the reasons why you should meet with us if you’re looking to establish an irrevocable trust to help you qualify for Medicaid or lower your estate tax liability.
Revocable Trust
You can modify the terms of a living trust or living trust or terminate it entirely anytime you’re alive. Therefore, the word “living trust” was used. During your lifetime, you will act as your trustee. Then you can name someone (preferably more than one) to become the successor trustee in case you are unable or die.
Your successor trustee will then be responsible for managing and ultimately distributing trust assets to beneficiaries as per the trust terms. The assets in a living estate trust remain your property and are subject to estate tax. Assets in living trusts are not protected against creditors or lawsuits, and this is an important point that is often overlooked.
Revocable living trusts do not protect assets from lawsuits or creditors, and they have no effect on income taxes. However, assets can still be protected from creditors and lawsuits as long as they are kept in a living trust. You can read more about this below.
A living trust has two main benefits: it allows you to transfer your assets, including your home, without the need for court or government intervention. It ensures that your home and other assets are passed in the manner you desire to the people you choose.
Turning Your Home into a Trust
It is not enough to list only the assets you wish the trust to include to work correctly. You must transfer your legal title to your home and other support from your name to the trust when you create it. This is called “funding” your trust. It is vital to fund your trust properly. If an asset such as your home has not been properly funded to your trust, it will stop working, and your family will need to go to court to take possession of the property. It is crucial to work with us, your Personal family lawyer, to ensure that your trust functions as it should.
Although many lawyers can create a trust on your behalf, very few will make sure that your assets are properly financed. We will make sure that your assets, including your home, are properly titled before you create your trust. Additionally, we will ensure that your trust is properly funded with any additional assets you acquire throughout your life. This will prevent you from losing your assets and also protect your family from being forced to go to court because your plan has not been completed.
Proper estate planning will keep your family safe from conflict, the courts, and the public eye. Contact us if you are ready to make a comprehensive estate plan. We will review your existing plan and help you update it to avoid any heartache for your family.