You know how important protecting your home is to you and your loved ones because you already used bankruptcy protection to stop a foreclosure, remove a lien, and/or to catch up with past due payments. You took action and avoided the disastrous result of the “Do Nothing Plan.” This was the first step to ensuring you have control of keeping your home legally protected. Now, in addition to staying current on payments, paying property taxes, maintaining insurance, and keeping your room clean, consider controlling ownership of your home with a living trust.
A Living Trust, also called a revocable trust, is a legal document designed for you to make sure that property placed in the trust will be managed by you while you are able and passed on according to your plans when you are no longer able because of disability or death. During your lifetime and as long as you are legally competent, the living trust can be modified, dissolved, rescinded, revoked, etc., You are in charge. You may place your home and other property in a living trust and name yourself as the trustee (person in charge). You can remove the property from the trust, sell the property, refinance the home, etc., without any required special permissions while you are alive and well. You designate who will take over for you should you die or become unable to make legally sound decisions.
A primary reason to put your home in a living trust is to avoid the probate process. Without a valid trust, your property can only be transferred upon your death through a Probate Court process. Probate cases are both lengthy and expensive and public. In community property states, the death of the second spouse would trigger the probate process if there is no trust. Transfer of real property, like the family home, to children or someone else, even with a will, cannot be done without probate court approval. In California the probate process can take 12-18 months and costs associated with probate may be 3-7% of the value of the estate and the process is public. (If you own property in multiple states, each state will have its own probate proceedings so the costs escalate quickly). Putting your real estate in a properly constructed living trust removes the asset from the probate estate. Transfer can be done quickly and privately instead of in lengthy and expensive open court proceedings.
A living trust may not provide asset protection from your creditors, but it may provide limited protection for the beneficiaries you name in the trust. In recent history, trusts were used as a tool to manage estate tax. Currently, estate tax is not a concern for most homeowners because it does not apply to estates with values less than 11 million dollars. For that reason, many people mistakenly believe they do not need to do wealth and estate planning.
Avoid misconceptions about what different trusts can and cannot do to protect you, your family, and your assets by working alongside an experienced attorney dedicated to assisting individuals and families as they take action to protect their financial future. From family heirlooms to the family home to planning for minor children in the case of a catastrophe, an experienced personal and family wealth planning attorney can guide you to the questions you didn’t know you needed to ask and the answers you need to hear.
We love the opportunity to educate our clients, neighbors, and community about the benefits of wealth and estate planning for families because we know that the outcome is so much better than what the government provides in the “Do Nothing Plan.” Contact us to get more information from one of the experienced personal and family wealth planning attorneys at Dolen, Tucker, Tierney & Abraham. We look forward to a personal and detailed session to help you identify and clarify your goals and what solutions may suit your needs.