Why You Should Put Your House in a Living Trust
Why You Should Put Your House in a Living Trust
Virginia Duan Mon, January 10, 2022
Part of being a responsible homeowner is having a proper estate plan in place. After all, considering the home is generally the largest asset most people own, it's prudent to ensure this asset is passed to the people you wish to leave it to. Just as you protect your finances from debt or use home security to protect your belongings, estate planning with a living trust can be a way to provide your loved ones with a legacy and inheritance.
For instance, do you know what will happen to your house if you and/or a co-owner were to die? Did you know that even if your will gives the kids your house, it can be held up for a long time thanks to probate law? Also, if you're in an LGBTQ+ family or have special needs, there are often unique circumstances to consider and account for while estate planning.
Read on for the benefits of putting your home in a living trust—and what common mistakes to avoid.
John Bessler
What Is A Living Trust?
Like a will, a living trust is a legal document that can be a vital tool for planning and distributing your assets to loved ones. Active as soon as it is created, a living trust assigns a trustee to manage certain assets—such as your house—on behalf of the future beneficiary. It can be either revocable or irrevocable.
A revocable trust means you can change the terms or control of the assets in the trust at any time. This is great for flexibility, but your assets still count as part of your estate when you die. An irrevocable trust allows your assets to no longer be counted as part of your estate, but you sacrifice some rights to control your trust and the assets held in it.
Portia M. Wood, a California-based generational wealth planning attorney, explains that the kind of trust you use depends on your unique situation. "It's based on three things: your family structure, your asset levels, and your goals," she says, "and then understanding exactly how your trust works as it relates to those three things."
How Much Does A Living Trust Cost?
Well, that depends. Generally, the up-front costs for a living trust will be more expensive than setting up a will or doing nothing at all. As with much of estate planning, costs for setting up a living trust vary by state and region—as well as complexity and customization.
"The savings do not occur until later," says California attorney Jonathan C. Watts. "And a wealthy family with a complicated estate can expect to pay much more than a young person who just bought her first house."
Why Your House Should Be In A Living Trust Versus A Will
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