Do you or your aging parents have at least $100k in assets or home equity? You may actually want to put your house in a trust!
I used to think that trusts were only for the ultra wealthy.. The trust fund babies.. And chances are that you do too! But if I’ve learned anything from 10 years in real estate, it’s that this is not true. Smart homeowners put their house in a trust to protect their assets. You may not be too poor for a trust!
Watch the Instagram video here.
So what is a trust?
Broadly speaking, you can think of a trust as a sort of container that holds your assets or Orange County home no matter how large. 💰
A trust is a legal arrangement where a person, known as the grantor or settlor, transfers property, real estate, a home or assets to another party, known as the trustee, to hold and manage for the benefit of one or more beneficiaries. Trusts are established based on a written agreement outlining the terms and conditions under which the trustee must manage and distribute the assets. They are commonly used for estate planning purposes to ensure the orderly transfer of assets and Orange County real estate to beneficiaries, providing flexibility, privacy, and potential tax benefits. Trusts can vary in complexity and may serve various purposes, such as asset protection, charitable giving, or providing for minor children or individuals with special needs.
3 Common reasons to put your house in a trust 🏡:
1. Avoid probate with a trust.
One of the largest financial planning misconceptions people hold is that having a will solves all your problems upon death. The truth is, your assets will end up going through probate. And this is NOT a fun process that costs significant money 💲 and can take years. Put your house in a trust and you can work towards avoiding probate.
2. A measure of protection.
Trusts can help ensure that your children or beneficiaries receive their inheritance if you divorce or remarry. 😇 They can help shield assets in some worst case scenarios. Some types of trusts can even protect against medicaid expenses. 💸
3. Tax benefits.
Do you like to save money? Putting your house in a well-designed trust can minimize significant taxes. Assets held in a revocable trust at the time of your passing typically receive a “step-up” in basis to their fair market value, potentially reducing capital gains taxes for your beneficiaries if they sell the assets.💲💲 In some cases, a trust can help an estate avoid taxes entirely.
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What is the downside of putting your house in a trust?
Do you want to put your house in a trust? The chief disadvantage is the initial cost and the few extra steps required if you have a mortgage. But while it is true that attorneys generally charge more to draft a trust than a will, the cost will likely be offset by other savings down the road. You can save on probate fees and legal fees, appraisals and associated costs.
If you have any questions about trusts, or if you’re curious about whether a trust is right for you, reach out to Orange County real estate agent Jaleesa Peluso at (949)395-0960 and we can help recommend an estate attorney. 👍🏻
You should always seek legal advice from an attorney before making any decisions relating to estate planning and changing title on your property. I’m not a legal professional. This is general education only.