Hello Katz - Here Are Your Articles for Thursday, July 12, 2018
Is this email not displaying correctly?
View it in your browser .
Website Industries Resources Services About Us Contact Us
Share Save

Your House in a Trust: The Pros and Cons


You may have heard of a living trust that's created while you are still alive. It can be set up as a revocable trust, permitting you to change the terms of the trust or to dissolve it entirely should circumstances change.

Such a trust can take the title to your home and transfer the control of the property to a trustee. When you die, the trust becomes an irrevocable trust, prohibiting future changes to the terms.

There are two major advantages to putting your home in a trust:

  • Avoiding probate—Most living trusts are structured to avoid probate and its costs. Some states have streamlined the probate process, but it still requires costs, time, and attendance at multiple hearings. If you wish to avoid probate and transfer the title to your home to your heirs, thereby avoiding probate, a trust is a strong advantage. Should you choose to transfer other properties, some of which are out of state, you can avoid probate in other jurisdictions too.
  • Future Incapacity Protection—Should you become ill and unable to properly manage your own finances, another trustee can be selected to manage your trust to protect your home. Living revocable trusts give you this benefit. If you have a co-trustee who is your spouse, this further simplifies and protects your home. Your spouse can remain as trustee, managing your home and other assets you've transferred to the trust.

Contrary to popular belief, trusts like these generally do not protect against the estate tax, but since there is such a high floor, relatively few estates are subject to the federal estate tax.

Regardless of your situation, such a trust should not be entered into lightly, and you should know some of these key issues before signing on the dotted line:

  • The complexity of designing a trust as compared with a simplified will can accelerate the costs to use this method of protection. Should you wish to shelter more than just your home, you'll need to be diligent and transfer other assets to the trust as you acquire them and remove those you no longer own. All this attention can add legal costs to maintaining the trust. That doesn't mean you shouldn't do it, just that you should be aware of the costs.
  • Other assets may be subject to probate. That means even modest bank or investment accounts must go through the probate process. And then, after you die, your estate may face more expenses—the trust must file tax returns and value assets, which potentially may negate the cost savings of avoiding probate.
  • Don't count on a revocable living trust to automatically protect your home from creditors. However, there are other ways of protecting your house from creditors—discuss details with a financial professional.
  • A little-known major living trust benefit comes into play if the trustor becomes incompetent. Then, the alternate trustee takes over management of trust assets without court costs and delays of appointing a conservator.
  • A trust is usually easy to change. Trust terms can be changed or revoked—until the trustor dies, when they become irrevocable. This prevents a surviving spouse from disinheriting a beneficiary named in the living trust—maybe a child from the deceased spouse's first marriage.

Trusts are excellent tools for your home and for other purposes as well. You need guidance to help you decide what is right for you and how to implement it. Give us a call to discuss whether putting a home in a trust is the right decision for you.

Share Save

Your Comments

Katz Nannis + Solomon PC
Katz Nannis + Solomon PC
800 South Street Suite 250
Waltham, MA 02453
Connect with me on LinkedIn
Saved Articles
Comments and Feedback
Refer A Friend
Your Privacy
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Powered by
Copyright © IndustryNewsletters All rights reserved.

This email was sent to: bwright@knscpa.com

Mailing address: 800 South Street, Suite 250, Waltham, MA 02453