Should Your Home Be In A Trust?
When property is held in a trust, the grantor gives another party, called a trustee, the right to control and manage the property for the benefit of a third party, called a beneficiary. A trust can be created during the grantor’s lifetime or after his or her death. Trusts are valuable estate planning tools with a wide range of possible uses.
Trusts can be used to control how property is managed and distributed, minimize estate taxes, bypass probate, protect assets from creditors, and more. Some people put their homes in a trust during the estate planning process. This blog will discuss the benefits of putting your home in a trust, the process of creating a trust, and how this can affect mortgage payments and other crucial matters.
Benefits of Placing Your Home in a Trust
During the estate planning process, you have seemingly countless decisions to make. One of the most consequential choices you will need to make is how to handle ownership of your home. You have several options when it comes to your home, but one option that may be worth considering is placing your home in a trust.
There are many potential benefits of placing your home in a trust. One of the primary reasons people choose to place their home in a trust is to avoid probate. Probate is the legal process through which an estate is settled after someone dies. It can be a long, complicated, and expensive process. If your home is transferred to an heir via a will, it will likely have to go through probate. However, if your home is held in a trust, it can be transferred to the heir without going through probate. This can save your loved ones time, money, and stress.
Trust Creation Process
If you decide that you would like to place your home in a trust, you will need to follow some specific steps to do so. First, you will need to draft a trust document. This document will outline the provisions of the trust, including how the property will be managed and distributed. After the trust document is created, you will need to transfer ownership of the property to the trust. This can be done by signing a deed that transfers the property from your name into the name of the trust. The deed should be recorded with the local land registry office.
How Does Putting a Home in a Trust Affect Mortgage Payments?
Once you have placed your home in a trust, you may be wondering how this will affect your mortgage payments. There is typically a “due-on-sale” clause in mortgage contracts that requires the borrower to pay off the remainder of the loan if the property is sold. The Garn-St. Germain Depository Institutions Act of 1982 provides an exception to this rule, however, for certain types of trusts. A skilled estate planning lawyer with experience drafting trusts will know how to create a trust that does not trigger the due-on-sale clause. You will be able to continue making mortgage payments normally.
What if I Want to Sell the House?
If your home is in a revocable trust, you have the authority to modify or dissolve the trust at any time. If you want to sell your home and it is in a revocable trust, you can transfer the title of the home back into your name and sell the home yourself. If you are both the grantor and the trustee of the trust, you can sell the house as the trustee. Selling a home that is placed in an irrevocable trust is more complicated. In this case, you would need to get consent from the beneficiaries of the trust to sell.
Call us for Help
Putting your home in a trust has many advantages, including avoiding probate. However, the process of creating a trust and transferring ownership of your home can be complicated and must be conducted properly to avoid adverse consequences. If you are considering placing your home in a trust, contact an experienced Naperville estate planning lawyer for help. Call the Gierach Law Firm at 630-756-1160 for a confidential consultation.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.