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Should I put my property into a trust?
If you own property, it’s essential that you plan for the future, as in, answering the tough question of what will happen to your assets when you die? You can (and should) have a will in place that will spell out your wishes and how assets should be distributed after your death.
Trusts, on the other hand, can be used both during your life and after your death and are often used in conjunction with a will. This fiduciary arrangement is designed to protect your assets and help you plan your estate.
Here’s what you need to know before establishing a trust and what it can do for you.
Choose the right trust for your situation
Trusts are designed to set terms for how a trustee manages assets like real estate. This can include who the house goes to, how finances are managed, and more.
There are several types of trusts available:
- Revocable: Can be changed or terminated by the trustor during their lifetime.
- Irrevocable: Cannot be changed once established because ownership of assets now belongs to the trust.
- Living: Establishes how the trustor’s assets can be used to their benefit during their lifetime. They can be their own trustee.
- Testamentary: Established how a trustor’s assets are used after their death and can only be used in an irrevocable trust.
- Funded: The trust is funded by assets titled in the name of the trust.
- Unfunded: The trust is not funded by assets titled in the name of the trust.
Your financial advisor will work with you to best determine your needs and find the right trust.
Benefits of trusts
According to the American Bar Association, probate is the “formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries.” When a property is already in a trust, the process of probate can be avoided and your family can take over your assets upon your death.
Other benefits of trust include:
- The professional management of your assets
- Protecting marital assets in the event of a divorce
- Protecting your assets during illness or disability.
Through the trust, your family won’t have to make financial decisions during difficult times without knowing your wishes.
Getting your trust started
Setting up a trust is a complex process, so understand that there will be paperwork to review and fill out. This is to ensure that all your bases are covered, and you have included everything and everyone you need to.
As always, have a plan in mind before making large financial decisions. Before establishing a trust for your real estate and other assets, consult with a trusted financial advisor and lawyer. They will guide you through the process and help you find the best option for you.
At SmartMortgage.com, a subsidiary of Guild Mortgage, our agents have experience in helping our customers manage their mortgages, even while in a trust.