I am a house owner. I am hearing about the need to "put the house in a trust".
Why should I do so?
What are the advantages and any disadvantages?
What are the costs? How long does it take?

https://letmegooglethat.com/?q=advantages+of+putting+my+home+in+a+trust

Most common reason is estate planning.

Why are people telling you this? Is it your primary residence or investment?

Beware of the cost basis capital gain tax implications if the trustees ever intend to sell the property

People are trying to help you save a ton of money if you die and hand your house down to your kids maybe. Your kids will have to pay taxes on the home value as if it was a form of money.

CS78 said:

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Most common reason is estate planning.

Why are people telling you this? Is it your primary residence or investment?

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Primary residence.
The reason I get is to "save" my assets in case I die so that the state won't take it or something like that.

aggiebrad94 said:

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Quote:

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I am hearing about the need to "put the house in a trust".

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Quit hanging around attorneys

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No, these are my friends and none of them are attorneys.

PrestigeWorldwideAg12 said:

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People are trying to help you save a ton of money if you die and hand your house down to your kids maybe. Your kids will have to pay taxes on the home value as if it was a form of money.

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So the difference between trust and no trust is that if I die, handing over the house to my kids will cost money while if it is in a trust it won't?

infinity ag said:

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PrestigeWorldwideAg12 said:

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People are trying to help you save a ton of money if you die and hand your house down to your kids maybe. Your kids will have to pay taxes on the home value as if it was a form of money.

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So the difference between trust and no trust is that if I die, handing over the house to my kids will cost money while if it is in a trust it won't?

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The trust owns the home and will not be paying taxes on it as the the trust is still alive. Your kids would be the beneficiaries of the trust. The trust still exists and does not die.

I don't think a trust can claim a homestead exemption and is going to pay property taxes.

It can for primary

The trust can claim a homestead exemption??

If it is in a qualifying trust it sure can.

My dad did this. I believe his reasoning was to make sure that upon his death the assets could be dispersed to my brothers and I without it being subject to probate.

If you have a net worth of what taxman90 outlines trusts can be a great tool.

One of the saddest things I saw was the couple in their 90s pass away within a month of each other. Their children were grown with college aged children of their own. This sweet, well-meaning elderly couple was talked into putting everything into a trust in the 1990s. Their estate was $800k, $350k was a house they custom built in the 1960s. When they died in 2015 their children were grieving, then realized how big of a headache small estates inside a trust are. It got ugly, frustrating and when one of the children passed away her children wanted her share of the money. At $800k a liquidation and split up would have been quick and easy on everyone.

Is this different than creating a living trust?

There are different type of trust so you should research them. One thing many people don't realize is the house can be taken as form of payment if you have an elderly unable to care for themselves and was using long term Medicaid Benefits. If the house is in a trust or something like that where it doesn't go through probable, Medicaid can't take it.

Just my experience with a Trust...which worked out great.

My Mother-In-Law put her home into a Revocable Trust (which she controlled). The beneficiaries of the Revocable Trust were her two children (my wife and her brother). When she passed, I sold the house (I was the executor) and the funds went into the trust, which were then dispersed to the beneficiaries. The entire process was seamless, and totally avoided probate.

She was not wealthy by any means. I've read articles online that state those without significant assets don't need a Trust. That said, in my experience, it was about as easy as it gets.

Probate can be avoided a few ways. Making sure beneficiaries are designated on all financial accounts and putting a transfer on death deed in place for the house can accomplish it too.

That's what we've done with my dad. Doesn't own a car and his personal property and home furnishings (which are minimal at this point) are just gonna get dumped via estate sale with the remainder hauled off as junk. Paid $200 for a lawyer to do the TODD and the rest was just making sure every financial institution has the right bene designation on file.

On the other hand, my grandmother died and everything had been put into a trust in the 90's (it was a big deal back then when the estate tax exemption was lower). My aunt and father were the trustees and didn't disburse the trust in a timely fashion. My dad died and rather than my dad's executor becoming co-trustee (which would have been my sister), my aunt became the sole trustee.

We had to threaten her with legal action to get her to execute the trust and the will after a year of literally nothing happening (costing my sister and I thousands) and she stole about $70k in the deal. She set herself up as the beneficiary on the joint account that they used to pay my grandmother's day to day bills. As a consequence, my aunt got to keep the money in the account (which was filled with my grandmother's money) and all of the medical bills that my aunt had chosen not to pay while my grandmother was still alive, and all of the carrying costs for the house that my grandmother hadn't lived in for years were paid for out of the assets in the trust. PLUS she got a trustee fee of a few percent of the estate which I think was like $25k.

YOU had a good experience with the trust because you were the trustee/executor and you are not a POS. You could have had an equally easy experience without it. My sister and I had zero trouble handling my dad's estate with a will and no trust. Investment accounts were set up with beneficiaries. She went to court and got letters testamentary and we were able to deal with anything else that came up using those because we were on the same page.

For people with reasonable sized estates and without large unsecured debts, trusts aren't going to make a bunch of difference from a tax perspective. They can make a difference from a liability perspective. There are trust instruments that you can set up to make it simpler to divide up the property based on your will. Probate isn't that hard to deal with if there is a will and there aren't conflicts. If you have concerns about conflicts with trusts or probate, make sure there is a good will and assign a 3rd party executor/trustee that will act without emotion.

hunterjr81 said:

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One thing many people don't realize is the house can be taken as form of payment if you have an elderly unable to care for themselves and was using long term Medicaid Benefits.

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Side question but has anyone ever seen this actually happen? Ive heard they will threaten the estate but never follow through.

I work with real estate in trusts on a daily basis and find it to be an unnecessary process if there are not other types of assets with considerable value held in the trust.

iamtheglove said:

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My dad did this. I believe his reasoning was to make sure that upon his death the assets could be dispersed to my brothers and I without it being subject to probate.

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^this is another reason. A surviving spouse can remarry and complicate things with a new will, but the trust will already spell out who it's beneficiaries are and how it is to be dispersed avoiding this issue.
Also, depends on the state and that states probate laws.

My wife and I live in Texas, but own property in Colorado. We are about to have that property put into a Texas Trust for these very reasons. Assure that property's distribution and avoid Colorado probate.

Canyon99 said:

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I work with real estate in trusts on a daily basis and find it to be an unnecessary process if there are not other types of assets with considerable value held in the trust.

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what do you consider considerable?

We formed a trust because we want to make the decision on all the things a trust can do while we are alive, and not someone else making those decisions for us if one of us dies.

Who watches the kids, who is in charge of our money, when the kids get our assets, etc etc. We aren't wealthy by any means.. just hit $1m net worth a few years ago, but I was under the impression without a trust, a lot of decision are made in a courthouse by people alive who may not have our best interests in mind, and we don't want that.

62strat said:

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Canyon99 said:

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I work with real estate in trusts on a daily basis and find it to be an unnecessary process if there are not other types of assets with considerable value held in the trust.

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what do you consider considerable?

We formed a trust because we want to make the decision on all the things a trust can do while we are alive, and not someone else making those decisions for us if one of us dies.

Who watches the kids, who is in charge of our money, when the kids get our assets, etc etc. We aren't wealthy by any means.. just hit $1m net worth a few years ago, but I was under the impression without a trust, a lot of decision are made in a courthouse by people alive who may not have our best interests in mind, and we don't want that.

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I think you are referring to a will not a trust. Everyone should have one of those especially if you have kids.

Taxman90 said:

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62strat said:

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Canyon99 said:

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I work with real estate in trusts on a daily basis and find it to be an unnecessary process if there are not other types of assets with considerable value held in the trust.

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what do you consider considerable?

We formed a trust because we want to make the decision on all the things a trust can do while we are alive, and not someone else making those decisions for us if one of us dies.

Who watches the kids, who is in charge of our money, when the kids get our assets, etc etc. We aren't wealthy by any means.. just hit $1m net worth a few years ago, but I was under the impression without a trust, a lot of decision are made in a courthouse by people alive who may not have our best interests in mind, and we don't want that.

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I think you are referring to a will not a trust. Everyone should have one of those especially if you have kids.

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no, I'm talking a revocable trust. A will still goes to probate in many states doesn't it?

DannyDuberstein said:

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Probate can be avoided a few ways. Making sure beneficiaries are designated on all financial accounts and putting a transfer on death deed in place for the house can accomplish it too.

That's what we've done with my dad. Doesn't own a car and his personal property and home furnishings (which are minimal at this point) are just gonna get dumped via estate sale with the remainder hauled off as junk. Paid $200 for a lawyer to do the TODD and the rest was just making sure every financial institution has the right bene designation on file.

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This is the way for the great, great majority of estates.