One of the most critical steps in the estate planning process is determining what will happen to your assets after you die. If you’re like many people, you probably want to ensure that the right person or people receive your home once you pass away.
Most real estate is non-probate, meaning it vests automatically in your heirs. And while that might sound like a good thing, sometimes it can create problems for the family. If you’re looking to make things as easy as possible for your loved ones and to achieve more control over what happens to your house, you may want to consider placing your home in a revocable living trust instead.
What is a Revocable Living Trust?
A revocable living trust is an agreement about your property ownership that you can alter or cancel at any time. This arrangement can give you more control over your estate, as you can name a trustee to manage and administer your property when you become incapacitated or die.
The most popular reason for placing assets in a revocable living trust is to avoid probate. Without a trust, your personal property needs to go through the probate legal process after your death, which could be time-consuming and stressful for your heirs.
Benefits of Putting Your Home in a Revocable Living Trust
1. Cover Immediate Expenses
Because real estate is often non-probate, your heirs will automatically assume responsibility for it after your death. This means that they will need to immediately begin covering mortgage payments, utilities, property taxes, insurance, and any other expenses related to your home.
However, because many of your other assets will be subject to the probate court process, your heirs will not instantly receive monetary assets from your estate that they could use to cover these expenses. If they can’t pay your mortgage and other fees out of pocket, they risk losing your home.
Placing your home in a revocable living trust can authorize the trustee to use the estate assets to pay the property expenses immediately. This benefit can ensure that your home is protected until the beneficiaries receive the financial means to cover the property’s costs.
2. Simplify the Selling Process
Placing your home in a revocable living trust can simplify your beneficiaries' process of selling the property after your death.
Without a revocable living trust, all of your heirs would be equally involved in the property sale. This means that everyone would need to agree on all of the decisions surrounding the sale, such as:
- Whether to sell the home or keep it in the family
- Whether or not to renovate the property to increase its value before selling
- Which realtor to hire
- Listing price
- What offers to accept
Some families may be able to navigate these decisions without issue. However, many family members have trouble handling these tasks amicably while dealing with the stress and grief following a loved one’s death.
Instead, a revocable living trust can allow the sole successor trustee to handle the property sale. The trustee can make all of the above decisions through their fiduciary duty, ensuring that they navigate the sale in the best interests of the beneficiaries. Then, they can simply distribute the funds from the sale equally between the heirs.
3. Allow for Special Instructions
A revocable living trust can also allow you to give special instructions about the property distribution and feel confident that your wishes will come to fruition after your death. This benefit is significant for people who have sentimental attachments to their homes.
For example, if you’d like to allow a family member to continue living in the home for some time, you can specify this in the trust. You can also include a right of first refusal that grants one of your family members the right to purchase your home before anyone else.
Altogether, placing your home in a revocable living trust can give you greater control and freedom to protect your assets after your death.
At Carolina Family Estate Planning, we recognize that each client is unique and has personal goals and objectives. We will help you make smart decisions to protect your family. Contact us today at 919-443-3035 or fill out our online form to schedule a needs-assessment call. We’ll help you get your ducks in a row.
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