People often establish trusts when they have complicated estate planning goals or unusual family circumstances. They may also specifically create trusts to manage their most valuable assets.
Some people choose to transfer ownership of their homes to trusts for their protection and to ensure the appropriate descent of the property after they die. What are the benefits of using a trust to hold the title of a primary residence?
Protection from litigation
If people face lawsuits, the plaintiff might seek compensation in the form of accumulated home equity. Creditors could also request that the courts place a lien against a home. Real property held in a trust before litigation begins may have protection from claims made by outside parties.
Reduced risk of probate complications
Moving a home to a trust reduces the risk of it triggering probate litigation. It also protects the home from creditor claims, including Medicaid estate recovery efforts. Trusts are also generally harder to contest in court than wills.
Nuanced possession arrangements
When a person allocates their home to a beneficiary in a will, that beneficiary assumes total control over the property. A home held in a trust could provide housing for vulnerable family members for the rest of their lives and then an inheritance for others.
A remarried parent could allow their spouse to stay in the home until they pass, at which point their children inherit the home. A trust could also ensure that an adult family member with special needs can live in their home for the rest of their life.
Many unique estate planning tools can be effective for people in challenging situations. Creating a trust can be a smart move for those who want to protect their homes and limit conflict about their real property after they die.