If you have a home that you’d like to protect in your estate plan, one of the things you should consider is setting up a trust. One of the reasons for setting up a trust is to make sure that your family doesn’t have to go through probate to have access to the property after you die. With a trust, you may save your family money and help them avoid spending time in court while sorting own ownership issues.
Putting your home in a trust can protect it against creditors and others. How? If you put it into an irrevocable trust, then the home doesn’t technically belong to you anymore. Therefore, collections agents or those who think you owe them a debt can’t touch that property.
You may also protect your property against spend-down activity if you’re trying to qualify for Medicaid in the future, since your assets may influence when you can qualify for this health coverage.
How do you put your house into a trust?
You can put your house into a trust by discussing your concerns with your attorney and financial planner. They will talk to you about different trust options and if you would like to set up a beneficiary for the property. You might choose to pass the property on to an heir or to set it aside for a charity, for example.
If you have a revocable trust, you will lose some of the protections of an irrevocable trust, but you still get to prevent the property from going into probate if you pass away.
Are there drawbacks to putting your home into a trust?
There can be some initial drawbacks, such as spending more to set up the trust and needing to complete paperwork to set it up. However, putting a house into a trust is usually beneficial, as it removes the property from your name (in some cases) or sets up beneficiaries to inherit the property if you pass away.
There are benefits and downsides to trusts, so it’s worth taking some time to research the legal benefits in the state where your property is held. Different trusts may benefit you depending on what you’d like to do with the property after you pass away.
