Your primary residence is likely one of your most significant assets. Deciding how that property will transfer after your death is a major estate planning decision.
One option is putting your house in a trust. Knowing the pros and cons can help you make the right decision.
What does it mean to put your home in a trust?
This usually refers to transferring your home into a revocable trust. You remain in control of the property during your lifetime, which means you can continue to live in the home, sell it or even remove it from the trust if circumstances change. However, the legal title is held in the trust’s name rather than your individual name.
After your death, your successor trustee will manage or distribute the property according to the trust terms you set.
One of the biggest advantages of placing your home in a trust is avoiding probate. If you were the sole title holder, the property would likely need to go through the probate process, which can take months or longer, and is public record. When your home is properly transferred into a trust, it typically bypasses probate. The trustee can transfer or sell the property more efficiently, privately and without court involvement. This is especially important for families who value discretion.
Placing your home in a trust can be particularly helpful if you have a blended family. Arizona is a community property state, and second marriages can create complicated inheritance scenarios. The trust’s terms can define who can live in the home, whether it must be sold and who ultimately inherits it. Clarity can prevent conflict later.
Creating a trust typically involves higher upfront costs compared to drafting a simple will. However, it could be offset by avoiding future probate expenses and complications.
It’s also important to remember that you must properly fund the trust. If you create the trust, but don’t transfer the deed into it, the property will still need to go through probate. It’s essential to draft and record a new deed.
Furthermore, a revocable trust doesn’t protect your home from creditors during your lifetime. If you are concerned about asset protection, you may need additional estate planning strategies.
