If you have a property that you want to leave to your descendants, you might want to put it into a trust. There are different types of trusts that you can choose, but you first need to know about the pros and cons of this. A trust might not be the right answer for you and only knowing all of the details will help you determine this.
The primary benefit of putting a property into a trust is the fact that you will spare your loved ones the probate process. When you leave a property in a will, it is subject to probate before your family can claim it. Probate is a court-supervised process and will list your assets, pay off debts and taxes before the remainder of your estate is distributed. If you have a property in different states, they are generally subject to the probate laws of that state and all states differ.
A benefit related to the probate process is the fact that a trust stops your family need to pay probate or attorney fees. Probate costs can reach up to 3% of your estate value, but if there is no probate, there is no need to pay any fees. While there are costs for putting property into a trust such as attorney fees, these will be handled when you set up the trust and not by your family after you are gone.
When a property is in a trust, your beneficiaries will also be able to have quicker property settlement. This means that they can move into the property as soon as they need to or they can choose to sell the property. If the property is in probate, it can be a nightmare to sell it before the probate process is complete.
While there are a fair number of benefits to putting property in a trust, there are also some drawbacks that you need to know about. The primary one is the fact that the process of setting up a trust is more complicated than a last will and testament. There is extensive paperwork that will need to be completed by you and an attorney before you can create the trust and place the property in it. The paperwork will also increase with the number of assets or properties that you place into the trust.
Another drawback with the trust option is that you will need to retitle the property in the name of the trust. If you forget about this step, your property will still be subject to probate and might not be inherited by the person you want. Changing the title also means that you could lose control of your asset, depending on the type of trust you choose. Putting the property into a trust can also cause issues with your insurance.
There are a lot of pros and cons to putting a property into a trust. If you are unsure about whether this is the right option for you, it is recommended that you talk to an attorney about this.