While estate planning, you may assume you only need to create a will to safeguard your assets. However, trusts are just as important. Understanding what you can place in the trust is vital if you’ve considered creating a trust fund. One common question that may arise is whether or not you can put a house in a trust. Please continue reading to learn if you can include your home in a trust in Maryland and how a trusted Montgomery County Trust Attorney can help you protect your assets.
Is it Possible to Put a House in a Trust?
Firstly, it’s essential to understand that a trust is a fiduciary agreement that allows the owner of property or assets to transfer legal ownership to another entity or person, known as the trustee. The trustee holds and manages the property for the benefit of the grantor and any designated beneficiaries. Essentially, they manage the trust per its terms and conditions.
If you wish to include your house in a trust, you must create a real estate trust. To transfer your home to a trust, you must sign a deed that names the trustee as the property’s new owner. The trustee would then assume the “title” as the legal owner of the property.
What Are the Potential Benefits?
Placing your house in a trust has several advantages. It helps ensure that home ownership passes smoothly to your beneficiaries after your death. This is because you can bypass the probate process. Generally, when you pass away, regardless of whether or not your assets are held in a will, they will be subject to probate. During the probate process, the court will validate your will to ensure all debts have been paid off before transferring assets to the designated beneficiaries. However, relinquishing legal ownership of your home will not be subject to the probate process.
In addition, trusts can offer certain tax benefits. If the property is sold, an irrevocable trust may be eligible for a reduction in estate and capital gains taxes. Assets within an irrevocable trust are also protected from lawsuits and creditors. Since the property in the trust is no longer considered your property and is instead held for the benefit of its beneficiaries, it will retain asset protection.
Nevertheless, despite the potential benefits, there are some downsides. Trusts are often complex legal arrangements that can be costly to establish and maintain. If you create an irrevocable trust, the terms cannot be amended or revoked after establishing them.
Considering all of this, placing your home in a trust can be an effective way to ensure a smooth transfer of ownership to your beneficiaries after your death. If you’re considering creating a trust, please don’t hesitate to contact JD Katz. Our legal team is prepared to help you carefully consider whether this is the right option.
