How Putting Your House in a Trust Can Make Estate Planning Easier

If you have a will or estate plan in place, you probably specified that your house will go to certain heirs. That’s a good first step. But you may want to think about whether you should put your house in a trust. 

Why Should You Put Your Home in a Trust?

There are some excellent reasons to put your home in a trust. One is that trusts don’t go through probate, which is the court process where a judge makes sure your will is valid and supervises how your wishes are carried out. Probate can be expensive and take a long time — months to a year or more. Putting your home in a trust simplifies the process.

Your beneficiary may want to live in or sell your home, so having your home in a trust means they may be able to move in or put the house on the market more quickly. Keep in mind, though, that your other assets will still need to go through probate. 

Putting property in a trust also keeps some information about your estate private. That’s because the probate process is public record, so anyone can access county records and research it. When your trust passes from you to your beneficiary, it’s not public record, so the information is more private. 

If you have a mortgage on your house, be sure to research whether you can refinance once the house is in a trust. Generally, refinancing a home that’s in a trust is difficult. Plus, putting your house into a trust can be time-consuming and the legal fees can be expensive, so you’ll need to decide whether you think the benefits are worth it.

How to Put Your Home in a Trust

There are two main types of trusts — revocable and irrevocable. 

You can be the trustee for a revocable trust, which means you can make changes to your trust. For example, you may want to add a new grandchild as a beneficiary. These types of trusts are more common because they’re more flexible. 

Once you’ve established an irrevocable trust, you can’t make changes. But an irrevocable trust may give you some tax and financial benefits. For example, with irrevocable trusts, your house probably won’t be subject to estate taxes. And, typically, creditors can’t access any money or assets that are part of the trust. So, if you have equity in your house and debt, this type of trust might be a good choice.

Once you’ve decided on the type of trust, choose your trustee and your beneficiaries. You might want to name a lawyer or trust company as trustee if your estate is complicated. It’s a good idea to name a backup trustee in case you outlive your selection. 

Finally, you will need to fund the trust with property and assets. This includes re-titling the house in the trust’s name. Once this step is complete, you have successfully set up a trust for your home. Make sure you give the trustee a copy of the trust.

Creating a Plan That’s Right for Your Family

While it can be complicated and emotionally draining to put together a plan for after you’re gone, it’s important for your heirs to know your wishes. 

Don’t procrastinate. A Farm Bureau financial advisor can help you create an estate plan that’s right for you and your family. Reach out for a consultation today.