When doing estate planning, a trust is a useful vehicle to place assets like real estate. Inter vivos trusts are funded during the life of the trust grantor and allow them some flexibility and control over their assets.
Read more below to see whether placing property in a trust is a wise move for you and your beneficiaries.
Trusts allow for probate avoidance
It can take a year (or even longer if contested) to probate a will. All the assets are frozen in the trust until the probate process has concluded. During this drawn-out period, the executor must maintain all properties and other assets within the trust.
They accommodate various types of assets
It’s not only property and funds that can be held in trust. Cars, boats, art and other valuables can be placed in trust for later distribution to the beneficiaries.
It should be noted that the trust grantor maintains responsibility for paying any taxes on income that the property might generate, e.g., restaurant sales, and also the annual property taxes that may be owed.
What about properties with multiple owners?
While ownership of the whole property is not yours to bequeath, you can donate the full amount of your share to your heirs and beneficiaries in the trust.
Irrevocable trusts are permanent
When establishing a trust, it’s important to understand that if the trust is irrevocable, no changes can be made to its ownership. That’s why it’s so important to understand all the consequences of placing assets in trust, as it changes the ownership from the person to the trust itself.
Still, the asset protection and tax benefits of placing property in trust may outweigh any potential limitations of irrevocable trusts. With help from your estate planning team, you will acquire the tools and resources to make the best choices.
