Your home is an incredibly valuable asset – for many people, it is their greatest source of wealth. You’ll likely want to make sure you pass it on to your family or other named beneficiaries when you pass. While there are many ways to do so, a trust may be the best option.
Are you wondering, “Should I put my house in a trust?” Consider the benefits and make the choice that works for your situation.
Why Put Your House in a North Carolina Trust?
The main reason to put your house in a trust is to spare family members from the probate process. While real estate generally passes directly to your heirs or beneficiaries, it can still be brought into the probate process in order to pay creditors of your estate. However, any assets in a trust, including real estate, will avoid probate and continue to be managed for the benefit of your beneficiaries when you pass away.
Why avoid probate? First, it delays your loved ones from accessing your home and other assets until the court finalizes the process. Fees can add up quickly, too; surviving family members could be saddled with owing large sums of money to pay for attorneys’ fees, court costs, and other administrative expenses of probate.
The probate process also exposes your estate’s assets, including their values, to the public. If you’d prefer to keep this information private, you can do so with a trust.
Should You Choose a Revocable or Irrevocable Trust?
You have two primary types of trusts to choose from: revocable and irrevocable. With a revocable trust (also called a living trust), you can change the trust’s terms at any time before you die. An irrevocable trust, on the other hand, does not allow you to change the terms you initially agreed to. The trust legally owns your home and other assets for life.
A revocable trust works for avoiding probate but doesn’t protect your home from creditors. If you’d like protection from debt collectors, you’ll need to pick an irrevocable trust.
If you’re wondering, “Should I put my house in a trust?” you’ll want to consider several important factors.
Can you put your home in a trust if you have a mortgage? Many mortgages have a due-on-sale clause that allows the mortgage company to call the loan due when you transfer the property. But federal law prevents this when you transfer the home to certain kinds of trusts.
If you own rental property, don’t put it directly into a trust. It’s often more beneficial to own rental property under the name of a Limited Liability Company (LLC). Then, your living trust can take ownership of the LLC.
When you transfer your home to a trust, contact your homeowners’ and title insurance companies to make sure insurance still covers the property.
If you’re married in North Carolina, creditors can’t come after your home for the debts of one spouse alone. However, you’ll lose this benefit if you put the home in a revocable trust. Similarly, if you are receiving government assistance such as Medicaid, you’ll want to tread carefully. Contact an estate planning lawyer to learn how to protect your home before you set up a trust.
Contact Brady-Cobin Law Group, PLLC, for Help With Your North Carolina Trust
To put your house in a trust, you’ll have to transfer the property with a deed. An attorney from Brady-Cobin Law Group, PLLC, can help you with this process. For a more detailed answer to the question, “Should I put my house in a trust?” contact us at (919) 782-3500 for a consultation.