What are the Advantages of Putting Your Home in a Trust?

Property trusts allow you to place your residence or any property you own into a trust to designate a beneficiary, explains a recent article, “When Should I Put My Home in a Trust,” from yahoo!life.com. Placing your home in a property trust makes it far more likely your home will go to its intended beneficiary.

The property trust can be revocable or irrevocable. So that you know which one you use depends on your unique circumstances. If it’s a revocable trust, you can change the terms of the trust up until your death. However, because you maintain control of the asset in a revocable trust, it’s not protected from creditors.

If the main reason you’ve put the house into a trust is to protect it from creditors, a court could reclaim the asset if it were determined the sole reason for the transfer into the trust was to elude creditors.

Generally speaking, people have three primary reasons to place their homes into property trusts—to avoid probate, keep their transactions private, and keep the transfer simple.

Avoiding probate. People who put their homes in a property trust often do so to avoid having their house go through probate. When the owner dies, their estate goes through this court process, and the executor pays any debts or taxes owed on the property. Texas state law will determine the beneficiary if there is no will directing how the property should distribute.

If the home is not in a trust or mentioned in a will, the property will usually go to a spouse or child, although there’s no guarantee this will happen. If there is no spouse or offspring, the property will go to the following closest living relative, such as a parent, sibling, niece, or nephew. If no living relative can be found, the state inherits the property.

Chances are you don’t want the state getting your family home. Even if you don’t put your property into a trust, having a will is a better alternative.

Probate costs and time are other reasons people put their homes in trust. The estate pays for probate costs, draining the beneficiaries’ ultimate share. Probate also takes time, and while probate is in process, homes need maintenance, and taxes and expenses add up. If the house sits empty, it can become a target for thieves and property scammers.

Another benefit of a property trust is to keep the transfer of the home private. If it goes through probate, the property transfer becomes part of the court record, and anyone can see who inherited the house. When family dynamics are complicated, this can create long-lasting family battles.

A property trust is also far more straightforward for your executor, especially if the home is in another state. If you have a vacation home in California but live in Texas, your executor must navigate probate in both states.

Speak with an Austin estate planning attorney about whether a property trust is right for you. They will create a property trust and transfer the property into the trust. This is a straightforward process. However, without the guidance of an experienced professional, you can easily make a costly mistake.

Reference: yahoo!life.com (Jan. 31, 2023) “When Should I Put My Home in a Trust”