Titling a house in trust is a crucial step in estate planning and property management. When you title a property in trust, you transfer ownership from yourself to the trust entity. If you are creating a revocable living trust, chances are you are creating a revocable, grantor’s, administrative trust that avoids probate. However, for this to work properly, the assets that would otherwise go to probate must be titled in trust or list the trust as a beneficiary to the asset after the surviving grantor dies. When you do your Trust with Surratt Law Practice, we make sure your home is titled in Trust and if appropriate, has a Homestead Declaration on it.
One primary advantage of titling a house in trust is the streamlined process of asset distribution upon your passing. By placing the property in a trust, you can specify how it should be distributed among your beneficiaries without the need for probate. Probate is a court-supervised process that officially transfers an asset out of a deceased person’s name and into a living person’s name. If the asset is in trust, there is no need to transfer the asset out of the decedent's name, as the Trustee has that power; thus, avoids the need for a probate transfer. Probate can be time-consuming and expensive, but a trust allows for a vastly smoother transition of assets.
Moreover, titling a house in trust provides privacy. Unlike a will, which becomes a public document during probate, the details of a trust remain private. This confidentiality can be essential for those who prefer to keep their financial matters and estate plans confidential.
When you make a grantor’s trust and title your home in it, that trust will use your social security number as its tax ID. So, it's really you, it's your social, but the IRS Code sees it as a separate entity. Thus, when you go to refinance your property, a lender will oftentimes make you retitle the home in your name(s) and then complete the loan. However, the company will generally NOT place your home back in trust. This is a HUGE issue. If you were to die and the home was not titled in trust, it would go to probate, which is what we want to avoid!
It is very important to remember that a trust can only avoid probate of an asset if the asset bears the Trust’s name on the title. When you refinance, sell, and purchase a home, please remember that proper titling is extremely important and should be double-checked.
Titling a house in trust is a prudent decision for those looking to simplify the distribution of assets, maintain privacy, reduce estate taxes, avoid probate, promote family harmony, protect assets for your beneficiaries, and ensure your own protection in case of incapacity. It's a powerful tool in estate planning that empowers individuals to have greater control over the fate of their assets and the well-being of their loved ones – just make sure that Title Companies don’t come along and mess it up along the way. You can always negotiate in the refinance process that the Title Company is responsible for retitling the property in trust for you.