A trust is an estate planning tool that can be used to protect your property from creditors, taxes, and lawsuits.
It’s important to note that a trust does not give you any control over the property it holds; trustees are in charge of the assets.
That means if you want to make changes or withdraw money from an account, you’ll have to get permission from the trustees first. A trust also helps avoid probate fees when someone passes away. However, there are some downsides as well: trusts may need more stringent accounting practices for tax purposes and they’re expensive given their complexity. But overall, this article will explore why a house should be put into a trust.
To Avoid Lengthy and Probate Processes
One of the reasons why you should put your house in a trust is because it will significantly reduce the amount of time required to get through probate processes. Probate means the court takes charge of managing and distributing someone’s property after that person dies, following the instructions in the last will and testament. If you die without a will or a trust, your heirs and creditors wait in limbo while the probate court sorts out your estate.
When you place your house in a trust, you turn it into “probate-avoiding property,” which speeds up the entire process. A trust gives the surviving trustee direct control over the property and allows that trustee to manage it until beneficiaries reach a certain age or meet specific conditions.
That Means You Can Avoid Liens and Foreclosures
When someone dies and leaves certain debts unpaid, lenders can place liens or even foreclose on the property. For example, if you stop paying your mortgage because you pass away, the bank treats your home as collateral until someone pays the remaining balance. But if you set up a trust to hold your house, the trust pays that debt first before anything else.
You Get More Control Over Your Assets
If you need money during an emergency or otherwise decide that you want to sell your home quickly without waiting for probate court processes to move through, having this power allows you to do so. Another reason why putting your house in a trust is good is that you get more control over what happens to it. If the trust document doesn’t name trustees to control the property, no one can sell it until they complete the legal steps required for a home sale.
That Means It’s Easier to Avoid Temptation
If you put your house in a trust, you will have less temptation to take care of yourself or your family by spending money from your account on other things. When you put your house into a trust, you give a trustee the authority to manage it. That trustee follows clear rules, which removes the risk of you making impulsive decisions or misusing the money tied to the property.
Divvying Up Your Assets Would Be Easy
Another reason why you should put your house in a trust is for when it’s time to divide up assets among yourself and your heirs. Without a will, dividing assets becomes difficult.Everything goes into the estate, and that gives you no clear rules to define the size or limits of each portion. Probate court processes also require everyone involved to agree on every step.
But if you’ve put all of your assets into one trust before passing away, then all beneficiaries need to do is deal with the person who serves as trustee (likely whoever set up the trust) in order to get their sharings.
No Worries About Your Inheritance Being Squandered
One final reason why you should put your house in a trust is that it ensures that your family won’t end up squandering your inheritance if something happens to them. When beneficiaries don’t have complete control over what happens with the home and property, then there is less of a chance for this type of wasteful spending (if anyone can even access and use the funds).
If someone sets up a trust document to avoid probate processes, liens, foreclosures, temptation, difficult divvying up of assets, squandered inheritances, and more, then putting their house into the trust becomes an easy decision.
There are many reasons why one might want or need to set up a trust. There are also some exceptions that would allow one not to set up a trust, but they are very rarely applicable. One of the most often used exceptions is if you do not have more than $40,000 worth of property that you wish to pass on. However, even if this applies to you, do not think that it means you should not set up a trust. It is best to seek legal advice in order to determine what will work best for your individual situation and concerns.