Most American own rather than rent their home. The homeownership rate is 65,4 % in the United States (Austin is below the national average and San Antonio is above the national average).
Putting a home into a trust can be a smart move when part of a strategically designed estate plan.
If you pass away in Texas, the probate process will distribute your assets – including a home – according to your will or intestate succession if you don’t have a will. Probate can be tedious and time-consuming. Putting your home and other assets into a trust bypasses probate, giving your estate to your heirs more quickly and with much less hassle.
Probate avoidance is a leading reason many Texans create a trust. There are other advantages to consider as well as some disadvantages.
Advantages Of Placing A Home In A Trust
Assets in a trust are distributed faster than those in a will. A will allows you to designate which heirs receive what property, but a will has limitations. A will must still go through probate before the property is distributed. A will can be contested while trusts cannot.
If you do not have a trust or a will, the state law will determine how your assets are divided. This process can leave out valuable people in your life and distribute property to people you wouldn’t want to receive it. Probate is public; trust administration is private.
You can place other assets in a trust. A home isn’t the only asset that can be put into a trust. Bank accounts, stock accounts, retirement accounts, art collections, and other valuables can be included.
Some trusts offer asset protection while you are still living. Property included in a properly executed irrevocable trust are generally protected from most creditors. A revocable or “living” trust – one that can be changed or dissolved – does not offer this protection.
Avoiding estate taxes is possible in irrevocable trusts. You forfeit your ownership of any assets contained in a irrevocable trust, making these assets technically no longer a part of your estate. Revocable trusts are still subject to estate taxes.
Living trusts offer protection should you become incapacitated. The successor trustee you name for your living trust is not only authorized to handle your estate upon your death. Should you become incapacitated, this person can step in to manage your affairs if you are unable to do so for yourself.
Placing A Home In A Trust Has Disadvantages
Probate will still be required for assets not included in the trust. Your heirs won’t be spared the probate process in Texas if you die with assets not included in the trust. The house will be inherited with fewer complications but everything else will have to be verified by Probate Court. Creditors must be given an opportunity to make claims against the estate, potentially leaving nothing else for your heirs.
Creating and maintaining a trust can be complex. Up-to-date recording keeping is crucial, especially for tax purposes. Legal documents must be drawn to transfer property into the trust. Trustees are accountable to beneficiaries for managed assets.
Assets in a revocable trust are part of your taxable estate. Unlike irrevocable trusts, a living trust can be seized by creditors and subject to estate taxes when you pass away.
Determining Whether A Trust Is Right For You
Estate planning offers numerous tools, including trusts, that can be utilized based on your goals and financial position. At Hembree Bell Law Firm, we work closely with our clients to evaluate what supports their best interests.
An estate plan can include any of the following:
- Durable Power of Attorney
- Healthcare Power of Attorney
- Advanced Directive
We consider the following when building your estate plan:
- Your age
- Whether you have children
- Whether you are married
- Your assets
- Your financial obligations
Want to learn more about estate planning or modify an existing one? Schedule a consultation by calling (737) 265-7656 or submitting our online form. We have convenient offices in Austin and San Antonio.
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