Buying a home is likely the largest purchase you will make in your lifetime. Protecting your hard-earned, most valuable asset and minimizing the risk of property being legally seized is something every homeowner should think about. Should you die, a trust will help pass on your estate to your chosen beneficiaries without losing anything in probate court.
But even while you are alive, a living trust can help protect your estate. This is especially important if you have a large estate or are considering putting your home under joint ownership with your spouse, who may have a job with a high risk of lawsuits. Planning and forethought will help keep your home and finances protected.
What is a trust?
A trust gives you control over your belongings and who ultimately gets them when you're gone. A trust is a document that creates a legal relationship in which you entrust your assets with another person, called a trustee. When you pass away, the trustee is responsible for passing on your assets to your listed beneficiaries. A living trust can also transfer assets during your lifetime - you could for example create a trust for your children to inherit some of your property when they turn 18, or another age you choose.
A trust is different than a will in that a will has to go through probate court, while a trust doesn't. The probate process transfers property upon your death, and people can contest certain things in your will at probate court. With a trust, you don't have to worry about that. Trusts are designed to avoid probate and safeguard your finances and assets.
Joint ownership may not be enough
It is quite common for married couples to buy a house under joint ownership. However, if one spouse has a profession that may subject him or her to the liability of lawsuits, like a doctor for example, having their name as a joint owner of the home could cause problems if they are ever sued. The property could be in jeopardy in a lawsuit, or someone could choose to file a lawsuit knowing this huge asset is an incentive to file. Instead of having both spouses jointly own the property, one spouse could be the owner, and create a trust. This helps you ensure your estate goes to the person you wish for it to go to in the event that you die first.
Without a trust, even if a house is under joint ownership in case one spouse dies, when the second spouse dies, the estate would still need to be probated in court.
Eliminate the risk of losing your assets in probate
Probate court is expensive and the process can be long. The bigger your estate, the more assets you risk losing in probate. To go through probate, a probate court has to hold hearings about your property and decide how to divide it upon your death. Even if you have a will, people can contest things in your will during probate court, and your estate may not be divided or distributed the way that you wished.
An experienced real estate attorney can help you with estate planning, setting up a trust or living trust. It may be wise to consider a trust if you own a home, or are shopping for your first home. An attorney can help answer other questions when it comes to estate planning to allow you to make informed decisions about your property.