Putting a home into a trust may seem like an option reserved for older homeowners who have paid off their mortgage and have accumulated an estate, including assets such as a home, motor vehicles, various investments, boats, rental properties, furniture and even a vacation home.

However, having a home that’s owned outright is not necessary to put it into a trust. In fact, trusts can be a good idea for younger homeowners as well. 

What are the advantages of trusts?

trustThere are several advantages to putting your home and other assets into a trust, even if you aren’t a retiree and haven’t accumulated a lifetime of assets.

First, putting your assets into a trust means that should you pass away, your assets will be distributed as you wish without your heirs having to go through the lengthy probate process in court.

This can save months or even years – as well as what can be substantial legal fees – in court. Instead, your home, vehicles, life insurance policies and other assets can be privately distributed to the family, friends or even charitable organizations quickly and efficiently. 

The second and often overlooked reason for putting assets into a trust is that doing so is an important part of planning for your care, should you become incapacitated due to illness or injury. 

As part of creating a trust in which your assets are held, you will name a successor trustee, a person who will be legally responsible for distributing your assets upon your death, or for representing you and managing your assets should you become incapacitated. 

In either case, planning ahead ensures that your wishes are carried out, the court’s involvement is minimized, and your family and friends are put through as little stress as possible. 

If your home still has a mortgage 

You may wish to consider putting your home and other assets into a trust, even if your home’s mortgage has not been completely paid. 

Remember, while you may have only paid a percentage of your mortgage, you still have equity in your home, which you may want to pass on to your children, siblings or your parents, for example. In these cases, the successor trustee can be directed to sell your home and distribute the net proceeds from its sale to whomever you wish. 

If you carry a life insurance policy large enough, you may direct that it be used to pay off your home, which can then be transferred to your heir or heirs. This relieves your trustee of the burden of selling your home quickly. Remember, if your home has a mortgage, your successor trustee will have to ensure payments stay current even though your home is in a trust. 

Special considerations should you become incapacitated

Trusts can be invaluable when a person becomes incapacitated. People who do not have assets in a trust may put their spouses and families in a position in which a conservatorship is established by the courts. A conservatorship requires a court-appointed guardian to manage that person’s finances, which can be painful and frustrating for family members. 

Get the guidance you need

The beauty of putting assets into trusts is that a trust can be tailored to the precise needs and desires of an individual. Trusts are also easy to establish and can provide a great deal of peace of mind. 

If you’re planning to buy a new home, get the expertise and the service you need; contact a SmartMortgage loan officer

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Regardless of your situation, our loan officers will support you from application to closing and are ready to help you. Contact us today and get the professional advice and service you need.

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The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.