As an estate planning attorney in Texas, my clients often ask about trusts. One morning, Harris, a long-time client, called me after years of delay, ready to finally put his estate plan in order. He was curious about whether he should put his house in a trust.
In his late 50s, Harris had a nice family home and a solid nest egg but saw himself as a man of average means. “Chris, I’ve always thought trusts were just for the rich, like trust fund kids. But my friend just put his house in a trust, and I don’t think he’s worth much more than us. Should I think about it too?”
I appreciated his honesty—it’s a common misconception that trusts are only for the wealthy. “Harris, trusts aren’t just for the rich,” I explained. “They’re powerful tools for anyone who wants to protect their assets, simplify estate planning, and make sure their family is taken care of. It’s not about how much you have, but what you want to do with it.”
He was relieved. “My main concern is making things easier for my family members when I’m gone. I don’t want my wife or kids to struggle with inheriting my things. Plus, my friend said putting his house in a trust helped his family avoid a long probate process and kept things private. Is that true?”
“Harris, your friend is right. Putting your home in a trust can help avoid probate, maintain privacy, and ensure a smooth transfer of assets according to your wishes.”
Like Harris, you’ve worked hard to build a life for your family. Putting house in trust can protect your legacy, ensuring your valuable asset remains preserved for future generations while providing peace of mind and a seamless transition for your loved ones.
Protecting Your Home: What Putting House in Trust Really Means
Putting a house in a trust means transferring the legal property ownership to a trust, which is a type of legal arrangement designed to manage and protect financial assets. A trust is governed by the terms of the trust you set forth in a trust document. You can still live in the house, make decisions about it, and even sell it if you choose.
This process simply creates a safety net for what happens to your home after you pass away. It’s similar to designating a responsible manager for your home’s future. For instance, you could use a trust to cover property taxes with funds from a money market account.
Revocable Living Trusts: Your Key to Flexibility and Control
In the world of estate planning, there are different types of trusts and the type of trust you choose is crucial. One option is an irrevocable trust, which offers significant asset protection. However, one of the most common options for putting a house in a trust is a Texas revocable trust.
A revocable living trust provides the flexibility to make changes while you are still alive. This means you can amend or even revoke the trust if your circumstances change, giving you peace of mind as you plan. This allows you to remain in control.
The Benefits of Putting House in Trust
Now that you understand the basics of a trust, you’re likely wondering, “Why would I put my house in a trust?” There are actually some really compelling reasons why people choose to handle their property this way. Putting a house in a trust can offer significant benefits, such as asset protection.
1. Avoiding Probate Court
Probate in Texas is a lengthy legal process involving the courts that occurs after someone passes away. It involves validating the will (if there is one), settling debts, and distributing assets, like credit cards, to heirs. When you put your house in a trust, it bypasses probate altogether.
This saves your family time, stress, and even potential expenses during an already difficult time. Probate can also impact other aspects of your estate, such as your checking bank accounts.
2. Maintaining Privacy
Wills, as opposed to trusts, become public record during probate. Anyone can see who inherited what. By using a trust, you can keep the details of your estate private. Only the designated beneficiaries of the trust will know about those assets.
This can be especially important for individuals concerned about maintaining the privacy of their family’s financial affairs. Trusts can also protect your beneficiaries from creditors, offering another layer of privacy.
3. Managing Incapacity
Life can be unpredictable. Should you ever become incapacitated and unable to manage your affairs, having your home in a trust becomes crucial for ensuring that important financial decisions are handled according to your wishes. The trustee, a person you choose in advance, will be able to seamlessly manage the property on your behalf, similar to how a power of attorney allows someone to make decisions for you.
They’ll follow your instructions, as laid out in the trust, ensuring everything is taken care of. This can alleviate a lot of stress for your family, especially when managing something as important as your home.
Important Considerations for Placing a Home in a Trust
While a revocable living trust offers numerous benefits, it is vital to pay attention to certain factors. Texas, like most states, has specific requirements for establishing and administering a trust. You’ll need to adhere to these guidelines to make sure your trust is valid and effectively meeting your goals. For example, if you are looking to use your trust to avoid probate completely, it is advisable to make sure that your estate planning attorney structures your trust to do so.
Here’s a step-by-step breakdown of the key actions you need to take:
- Establish a Revocable Living Trust. This involves outlining its terms and appointing a successor trustee who’ll take over management upon your death or incapacity. Remember, your trust is tailored to your needs and goals, so choosing the right trustee is crucial. If your estate is complex, you might consider an attorney or professional trust company for this role.
- Prepare your Trust Agreement. This legal document should clearly outline who receives what assets, and under which circumstances, among other details. Seek the guidance of a qualified estate planning attorney in Texas for this process to ensure everything is in order. Trust agreements are quite important and help mitigate future complications, making it crucial that they’re drafted correctly.
- Transfer your House to the Trust. This is often done by preparing a new deed transferring the property from your individual name into the name of the trust. Just like creating a will or forming a trust, having this done properly the first time minimizes the chance of headaches down the line. This is an example of why following Texas trust laws are essential.
- Make sure to inform your Mortgage Company and Insurance Providers of the Transfer. By notifying all relevant parties, you keep things transparent and avoid potential problems during the administration of the trust.
How a Trust in Texas Compares to Other Methods of Transferring Property
Texas offers several methods for transferring a home upon death. Each has its own pros and cons. Understanding these options is essential when considering a property trust or any estate planning tool. You should discuss your specific circumstances and goals with a qualified estate planning attorney to set up the right plan for you.
1. Last Will and Testament
You’ve probably heard of this one. While common, a Will is subject to the probate process. If you want to spare your family from probate, a Revocable Living Trust might be a better option than using a Will.
A Will only covers assets that are solely in your name. Jointly owned assets, such as a house with a spouse, may have different rules, making a trust a more comprehensive option.
2. Transfer on Death Deed
This legal document, often referred to as a TODD, allows you to designate a beneficiary to inherit your home and avoid probate. While seemingly simple, TODDs can be inflexible if your family’s needs or circumstances change, and they may not be appropriate in all situations, so talking to a Texas estate planning attorney is always a good first step.
It’s important to remember that each estate planning tool has its place. What works for one person may not be the best fit for another, making legal advice crucial.
Navigating the Process of Putting a House in a Trust
If you think that putting your real property in a trust is the right decision, take it one step at a time. But remember, estate planning is not a DIY project. Seek expert guidance to make sure you’re doing what’s best for you and your loved ones.
I recommend speaking with an estate planning lawyer. It’s essential to create a trust document that complies with all Texas laws and addresses your unique situation.
Things to Consider When Putting House in Trust
Every situation is different, and having your real estate in a trust isn’t a one-size-fits-all solution. To figure out the best route for your circumstances, carefully weigh the advantages and drawbacks of placing your property into a trust.
A comprehensive evaluation with the help of a qualified professional can help ensure you make choices aligned with your specific goals. This can give you peace of mind knowing that your estate, including your home, is handled according to your wishes.
Drafting the Trust Document
When drafting a trust document, clarity and thoroughness are key. Avoid cutting corners with DIY solutions and join forces with an estate planning attorney. Trusts are intricate, and small oversights lead to future headaches. Your trust document should clearly specify several items.
Work with your attorney to assure that details are included such as your name and address, as well as the trustee’s name and contact information. You’ll also want to name a successor trustee, who takes over management if the original trustee cannot fulfill their duties. The document should outline the beneficiaries’ names and contact details.
Provide clear instructions on how assets are to be managed and distributed. Don’t skimp on clarity. Use precise language in the trust to prevent misinterpretations.
Common Questions About Putting a House in a Trust
Is it better to gift a house or put it in a trust?
Deciding whether to gift a house or put it in a trust hinges on your specific goals. Gifting transfers ownership during your lifetime. This has tax implications and means relinquishing control of the property.
While this approach bypasses probate, gifting could create gift tax liabilities. A trust, on the other hand, maintains your control while you’re alive. It ensures a smooth transfer of ownership upon your passing. Consult with Texas estate planning attorneys to determine the best option for you.
What are the advantages and disadvantages of putting a house in a trust?
Putting your house in a trust provides several advantages. A few advantages include probate avoidance, privacy, asset protection, and incapacity planning. It can also offer certain tax benefits.
However, there are a few potential downsides. Critics argue that trusts can be expensive to set up, but probate often costs more than a well-drafted trust. Managing a trust might take a bit more time than owning a property outright. You may need to seek expert advice for certain actions.
How much does a trust cost in Texas?
Estate planning costs depend on the complexity of the trust, the lawyer’s experience, and location. It’s a misconception that estate planning is only for the wealthy.
Texas trust attorney fees range from several hundred to a few thousand dollars. This fee typically covers the drafting of the trust document. Consider shopping around to find an attorney who meets your needs. A solid trust offers value for both you and your beneficiaries.
Conclusion
Putting a house in a trust is a valuable estate planning tool that can simplify the transfer of your property to your beneficiaries, minimize estate taxes, and maintain privacy. It is essential to consider all factors and consult with an experienced attorney to make informed decisions.
Will Harris Move His House into a Trust?
“Chris, I’ll say it again, I just want adjusting to life without me to be as easy for my family as possible,” Harris said after learning about how trusts work. “If I understood you correctly, if we move the house to a trust, they won’t have to go through probate and deal with the courts. Is that right?”
“That’s right. A will has to go through probate and the courts,” I said. “When you put your house in a trust, your family can skip probate when you pass away. This not only saves your family time and money, but it also keeps your estate private—unlike probate, which is a public process. It’s a great way to keep your personal matters out of the courts and off the lips of your neighbors.”
Harris was intrigued but still had questions. “I like this concept but how does it work? Do I lose control over my house?”
How a Living Trust Can Simplify Estate Planning
“No, no, no,” I assured him. “We’ll structure the trust documents so that it feels as if you still own it, even if technically it’s owned by your trust. We often use a revocable living trust. With this, you retain full control over your property while you’re alive—you can live in your house, sell it, or refinance it if you want. The trust simply acts as the legal owner of the home, and you decide who will manage it and who will inherit it.”
“That sounds like it can work for us. So, if I did it, would I be the poorest person to ever have trust?” Harris said jokingly.
“Come on Harris,” I said. “You’re doing great because you made smart financial moves throughout your life. This is just one more smart move that’ll protect your family and your legacy.”
Thanks Chris, I think I’ll do it,” Harris said. “But let me discuss this with my wife before we make a final decision. After all, we own the house together. I’m going to present this trust thing as a final gift to her and the kids. I just don’t want them to have to worry about anything when I’m gone.”
Once Harris called me to confirm his wife was on board, we began the process of setting up a trust that aligned with his goals of securing his family’s future and ensuring his legacy would be handled exactly as he intended.
Schedule a Consultation with our Dallas Firm to Determine if you Should Put Your House in a Trust
Deciding whether to protect your legacy by putting your house in a trust can be stressful and challenging, but you do not have to face it alone. Our experienced Dallas estate planning attorneys are ready to provide you with the guidance, support, and legal advocacy you need during these challenging times.
Whether you are trying to determine if you should put your house in a trust or any other estate planning matters, we are here to help you every step of the way. We welcome you to schedule a consultation to discuss your situation and estate planning objectives. We can answer your legal questions and discuss how we can help you move forward. Call our law office at (888) 584-9614 or contact us online to schedule your consultation.
