A Warm Guide to Living Trusts for Real Estate

When it comes to estate planning, one of the most trusted and efficient tools is the Living Trust. This guide will help you understand what a Living Trust is, who the key players are, and why it might be a good option for holding title to your real estate. If you have questions along the way, don't hesitate to consult with your title company or legal counsel. Let's get started!

What Is a Living Trust?

A Living Trust, sometimes known as an Inter-vivos Trust, is a legal arrangement created during the lifetime of the Settlors, the people who set up the trust. Unlike a will, which only takes effect after death, a Living Trust is active during the Settlors' lives. Typically, the Settlors act as their own Trustees, managing the trust while they are alive, and appointing beneficiaries to inherit after they pass away.

Who Are the Parties in a Trust?

In a typical family trust, the key players are the Settlors, Trustees, and Beneficiaries. Settlors are the ones who create the trust and transfer their property into it. Trustees are responsible for managing the trust's assets, usually the Settlors themselves during their lifetime. Beneficiaries are the ones who will inherit the assets in the trust, often children or other family members.

Can a Trust Hold Title to Real Property?

Technically, it's the Trustee who holds the title to the real property on behalf of the trust. This means the Trustee has control over the property and can make decisions about it, including selling, transferring, or encumbering it. It's important to choose a Trustee you trust, as they will have significant authority over the property's management.

Is a Living Trust Right for You?

A Living Trust offers several advantages, such as avoiding the lengthy and often expensive probate process, minimizing or postponing estate taxes, and providing some protection from unsecured creditors. However, it's best to consult with an attorney or accountant to determine if a trust aligns with your financial goals and estate planning needs.

Additional Questions You Might Have

Can I Homestead Property Held in a Trust?

Yes, as long as the property meets the requirements for homesteading.

Can a Trustee Borrow Money Against the Property?

A Trustee can borrow or encumber real property if the trust's terms allow it. However, not all lenders are willing to lend on property held in trust, so it's essential to check with your lender beforehand.

Is It Safe to Have Someone Hold Title for Me "in Trust"?

This is generally not advised. If you don't want your name on the title, using a third-party Trustee can be risky, as they have full control over the property. It could lead to legal complications and loss of control.

Living Trusts can be a valuable estate planning tool for holding real estate, but they require careful consideration and legal advice. Always consult with experts to ensure you're making the right choices for your unique situation. You can contact me if you have any other questions about Trusts and anything real estate!