If you have a piece of property that you want to protect, one of the best ways to do so is to transfer ownership of it into a trust. Trusts are a valuable resource that not enough people know about and even less fully understand.
Below, we’ll look at what a living trust is and why it is different from having a will. We’ll then look at how you would go about transferring real estate into a living trust. But a trust can hold more than just real estate, so we’ll also briefly touch on what else you can transfer into a trust.
What Is a Living Trust and What Makes It Different from a Will?
A living trust, which is also called an inter vivos trust, is just what it sounds like. It is a trust that you make while you are living. You can transfer property and assets into the trust and name beneficiaries to the trust so that they would inherit the property within the trust later.
To some, this will sound an awful lot like a will. They can both serve the same function, but they do so in very different ways. A will has to go through a court process called probate and this can be a lengthy, confusing, and costly process. Because of the way that a will works, the executor must go before a judge, which typically means it will take more time and money, two things which people tend to hold dear.
A common type of living trust is a revocable living trust. This is a trust that can be modified or revoked, which means that you have more control over it. You can name yourself as a trustee of it so you wouldn’t have to entrust control of the property over to somebody else. Within the document, you would make sure to name who the successor trustee was so that when you die control would move over to that individual so that they can distribute the property in the trust to your beneficiaries.
It should be noted that couples can create a shared trust, where control of the trust would not move on to a successor until both spouses were no longer capable of managing the trust, be it by death or illness.
You could also transfer property into an irrevocable trust, but these are a little more complicated and typically require you to fully give up the ownership and control of the property within the trust.
How Do I Transfer Real Estate into a Trust?
For most people, the biggest thing that they’ll ever purchase is their home. It can be exhilarating and terrifying to spend so much money on a single thing. So it’s no surprise that people look for ways of protecting their investment and even less surprising that they discover the usefulness of trusts.
You will need a deed in order to transfer the ownership of your property into a trust. There are different types of deeds, such as quitclaim deeds or warranty deeds, and it can be difficult to determine which is the most appropriate for your particular situation. There is also a lot of official business that must be maintained in order to have a legal deed, such as getting it acknowledged through a certification by a notary public.
Keep in mind that transferring a piece of real estate into a trust will involve a lot more steps than most people realize. For example, you will need to change over your homeowner’s insurance so that it properly lists the owner as the trust. There could also be some work that must be done with the taxing authorities to ensure that everything is legitimate and any exemptions gained are recorded. For example, the home owner should also update their homestead exemption with the county so that they maintain their homestead protections and tax preferences and/or exemptions.
While the actual process of transferring real estate into a trust is fairly straightforward, there are a lot of hoops that you need to jump through in order to get the end result that you want. The best way to speed up the process is to work with an attorney from the beginning so that you take each step in the proper order and don’t miss anything along the way.
What Else Can Be Transferred into a Trust?
Some assets are extremely important and valuable within your family, but they don’t have the same value as a piece of real estate. Regardless, you decide that you want to do what you can to protect your assets and find yourself wondering if you can include them within a trust.
Thankfully, trusts are great for far more than just real estate. There are a number of things that you can transfer to a trust in Texas. These include:
- Family heirlooms
- Bank accounts
One thing that you can’t transfer into a living trust is a 401(k) or similar retirement accounts. However, you could name the trust as the beneficiary. This would mean that the benefits are paid into the trust when you die, which could help to protect the money to ensure it can be passed on appropriately.
Should I Work With an Attorney On My Trust?
Working with an attorney will make the whole process much easier. Setting up a trust doesn’t have to be a hard experience but it is one that takes quite a bit of knowledge to really benefit from. An attorney that has experience in the field of estate planning can save you a whole lot of time while helping to maximize the benefit you get from your trust.
If you are considering starting a trust to protect your family home or any assets, then reach out to Mike Massey Law, PLLC. With years of experience setting up trusts, you can ensure that you’ll have a smooth experience, that you can get answers for any questions you may have, and that your experience setting up your new trust is a hassle-free experience.