The Benefits of Putting Your Home in A Trust
Updated: Sep 20, 2022
Estate Planning is one of the most thoughtful and proactive acts we can do for our loved ones. Therefore, we encourage you to continue reading below to learn why it may be beneficial for you to put your home under a Trust. We will also answer a few of the most common questions regarding if a Trust is a right choice for you.
What is the benefit of Estate Planning?
Estate Planning documents could be some of the most essential paperwork you will create during your lifetime. Putting together an Estate Plan will help protect your assets and leave a legacy for your loved ones.
What is the difference between a Will and a Trust?
One significant difference between a Trust and a Will is that a Trust takes effect during your lifetime, while a Will only takes effect after you are deceased. Another thing to consider is the type of legal documents you choose, which can drastically affect the amount of time and expenses your loved ones will have to spend in order to receive their inheritance.
Conrad Tan from Vista Sotheby's International Realty says, “As a Real Estate Agent, I take pride in helping the members and clients ... a common mistake is homeowners not investing in Estate Planning. There are many components, but a very important part of this is creating a Trust Account and using the Trust Account for title purposes of your home. One key benefit of a Trust is that it prevents probate from occurring. Homeowners can create a Trust when they purchase a home or do the transfer after purchase."
What is probate?
Probate is a court-supervised process of authenticating the instructions and assets in a Will. The duration of probate varies by county but can take as long as two years. The average cost of probate with court fees, etc., is 10% of the total value of the assets.
Probate means that there is a court case that deals with the following:
• Deciding if a Will exists and is valid.
• Figuring out who is the Decedent's heirs or beneficiaries.
• Figuring out how much the Decedent's property is worth.
• Taking care of the Decedent's financial responsibilities; and
• Transferring the Decedent's property to the heirs or beneficiaries.
There are many benefits to a Trust:
The assets from a Trust do not go through probate.
A Revocable Living Trust allows a substitute Trustee (a person that you assign) to manage your affairs if you become incapacitated, such as from a coma or Alzheimer's.
A Trust is private. On the other hand, once filed, Wills become part of the public record and can be accessible to almost anyone.
A Trust can include provisions to financially protect Beneficiaries that have special needs.
How do I set up a Trust?
1. Make a list of all your assets, including physical and financial property.
2. Choose a Trustee, the person who manages the assets in a Trust. For a Revocable Living Trust, many have chosen to name their self. However, you will want to name a Successor Trustee if you do this. The Successor will be the one who will take over your assets once you pass on or become incapacitated.
3. Choose Beneficiaries, the person or persons you will leave the assets in your Trust to. Or, if you would like to leave any asset to a non-profit as a Beneficiary, you can! You will want to include the charity's full name, business address, and EIN (Employer Identification Number). To discover a charity's EIN, click here.
4. Draw up your declaration of Trust. Below are a few ways you can go about doing so:
• DIY. There are many options to create a Trust yourself through one of many websites, books, and guides available to instruct and guide you. However, you should be very careful and make sure that these publications comply with California law.
• Hire an Estate Attorney. When looking for an Estate Attorney, do your research. Although many attorneys and other professionals who can assist you with Estate Planning are Trustworthy, few may not be.
Click here to review some points to look for when selecting the right attorney for you.
5. Sign the Trust document
6. Transfer your property to the Trust. Even if you are the Trustee of your Trust, you will need to change deeds and titles to name you as the owner in your capacity as Trustee. For example, instead of "Rachel Smith," the new deed should read "Rachel Smith, Trustee of the Rachel Smith Revocable Trust."
*This does not constitute legal advice. Please seek your own legal counsel.