| Using Your Real Estate to Fund Your Revocable Living Trust | ||
| Interests in real estate, such as the family residence, are often the largest asset in an estate plan, including living trusts. Living trusts (also known as revocable trusts) are an increasingly popular estate planning method for persons wishing to avoid the statutory costs and inconvenience of probate, and unnecessary estate taxation, while accomplishing their management and property distribution goals. Living trusts, however, will not avoid probate or unnecessary estate taxes unless they are properly funded. To be properly funded, assets, including, but not limited to real estate, should be transferred into the trust. This often involves changing title on the deed to real property from persons as individuals to the same persons as trustees of their living trust.
A commonly occurring "mistake" that I see individuals with living trusts make, is failing or simply forgetting, when they buy real estate, to take title to their newly purchased asset in their names as trustees of their living trust rather than in their names as individuals. They may have last seen an attorney years ago when their living trust was created and transferred their former residence into the trust at that time. As the years go by, they buy and sell houses. When they come to see me to update an existing trust written by another attorney, they do not realize that their trust is no longer funded by their residence. They have forgotten that their new residence must also be titled in their names as trustees for it to be distributed as a trust asset at the time of their death. If their living trust is not funded by their residence, frequently the interest in the residence passes under their will and must be probated. If you have a living trust, and your intent is to place your residence in the trust, please consult with an attorney on how to take title when purchasing a new residence. Whether you take title as trustee of your living trust can make the difference between successfully implementing the desired distribution of your estate as stated in your living trust without requiring probate or requiring your executor go to probate court with the associated statutory costs and inconvenience to have your residence pass to your heirs under the living trust. DISCLAIMER: The above is intended as general information only. It does not constitute legal advice or a legal opinion regarding your particular situation. Only an attorney who has reviewed all of the pertinent facts and circumstances can render a competent legal opinion for your paticular situation. For individual planning and drafting of documents appropriate for you, see your estate planning attorney. © Jennifer P. Cody, 2004 | ||
