In today’s episode, Tess from New York asks the question of what are the benefits of putting your home into a trust and the pros & cons of doing so.
Listen in to find out the details and reason of why you should or shouldn’t use trusts to help you plan your future. Estate and asset protection is a complex subject, make sure you listen to this episode and seek the proper council that fits your specific situation and desires.
I’d like to start of this discussion with first saying there are several different type of trusts and used for many different types of reasons and advantages.
Let me first start off by explaining the basics of any trust and how they typically work informally.
The idea of a trust in general is to form a contract or set of agreements and instructions delegated by a grantor—the grantor is the person who wishes to give the instructions or duties to a third a party, usually a trustee—to be carried out in the event of something or an event happens or triggers the instructions in the future. When this event happens the agreements are then carried out per the trust to a beneficiary of that trust. The beneficiary can be a living person, a charity or just about anything or anyone.
If your question is will a trust add some asset protection? The answer is it depends on the type of trust and how your estate is laid out. The better wat to protect yourself from liability is to incorporate umbrella insurance policies with trust together. But I will stick to the specifics of trusts for this episode.
I am going to speak to the general form of a living trust because that is what most of the listeners are probably familiar with or most attorneys default to when discussing trusts for your home. These are also sometimes called family living trusts as well.
So let me explain what a living trust is:
Created while the homeowner is still alive, these are set up as revocable trusts, permitting the grantors, also often the trustees and beneficiaries, to change the terms of the trust or dissolve it entirely. The trust takes title to the home and transfers control of the property to the trustee. When the grantor dies, the trust becomes an irrevocable trust, prohibiting future changes to the terms.
– a living trust is where you transfer title to your major assets, such as home, cars, stocks and bonds, mutual funds, boat, RV, bank accounts and other significant assets into a living trust, which then holds the title. It is completely revocable at any time.
At the beginning, you (and your “significant other,” if you have one) are the trustor or often called the grantor, which simply just means you are the(creator of the trust), you are often the trustee (manager of the living trust) and beneficiary (person who benefits from the trust). In other words, you continue buying, selling, holding and managing your assets just as before you put their title into your living trust.
When you (or your “significant other”) die or become incapacitated, the terms of the living trust become operative. If you are unable to manage your affairs, the alternate trustee (such as an adult child, trusted friend or attorney you can trust) already named in the trust document takes over management of the trust assets until the other party dies, assuming you had a spouse or significant other.
Upon the death of the trustor, if the living trust terms specify that all your assets are to go to your surviving spouse, or perhaps your favorite charity, that happens automatically without any probate court costs or delays.
One important thing I want to point out here is that if you have just your home in a living trust or family living trust that will be the only asset that passes through without probate.
It is important that you speak with a qualified estate planner for your specific situation. if you have additional assets such as a business or other properties, stocks, or large bank accounts, etc these need to be included in your trust in order to pass through without additional probate proceedings.
If you have any questions about this and you would like to reach out to me send me an email at questions@realwealthwhisper.com
By the way this is another good time to mention that if you or someone you know has a question about life, love or sustainable wealth, go to the realwealthwhisperer.com home page and hit the record a question button on the top or side of the page, then scroll down the page it opens to where it says start recording and simply speak into the mic on your desk top or smart device. or click here: www.realwealthwhisperer.com/record-live-question/
As you can see this can become a very complex subject and should be left up to the professionals you consider trust worthy. If I can be of any guidance specifically to something that is urgent, please feel free to reach out to me. Reach out via email at realwealthwhisperer.com Go to the contact us at realwealthwhisperer.com page and send me an email directly from there
The Conclusion to all of this is… Living trust advantages far outweigh any disadvantages or inconveniences. However, attorneys who specialize in probates will often discourage creation of a living trust. Or make a mountain out of a molehill to increase their fees. So just make sure you don’t visit the law offices of Dewy Cheatum and Howe!
Check out all the details of this episode to learn more.
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