Should You Put Your Home in a Living Trust?

Living trusts — especially revocable living trusts — are often used by estate planners to hold ownership of significant assets like houses. There are many benefits of living trusts in the context of estate planning; for starters, they allow the assets contained within the trust to bypass the probate process after the original owner passes away. Trusts also allow the contents to be kept private and for the successor trustee to gain control over the assets while the grantor (original trustee) is incapacitated. 

There are multiple considerations homeowners should address before funding a living trust with their homestead. Before we dive in any further, we should clarify that a homestead, in Florida, is real property owned by a “natural person” and used as that person’s permanent residence. A certain amount of equity in a homestead is typically shielded from creditors if the owner files for bankruptcy. Generally, a homestead owned by a living trust is still eligible for the homestead bankruptcy exemption. If a creditor in your bankruptcy case insists upon the contrary, you should retain the help of an experienced attorney. 

Refinancing Your Home

During the course of your mortgage’s term, you might be tempted to refinance your home if you become eligible for a better rate. Some mortgage lenders insist that homeowners take their houses out of any trusts before going forward with the paperwork to refinance. You should not have to take this extra step, though. If you are not able to persuade the lender to refinance your home, you will likely need to find another lender, unfortunately. 

Due on Transfer Clause

Many mortgages have a “due on transfer” clause attached to them. This means the remaining balance is due whenever the loan is transferred. This should not be triggered upon transfer to a living trust, but it is a good idea to notify your lender prior to transferring your house to the trust. 

Terms of a Trust

One of the main advantages of a trust over a Last Will and Testament is the ability of the grantor to apply unique terms to the property held by the trust. An asset in a Will typically passes — in full — to beneficiaries when the beneficiary turns 18. Trusts allow successor trustees to maintain property and distribute it to beneficiaries according to the trust’s terms. For instance, you might not want your children to inherit your home the second they turn 18. 

Contact Our Firm for Precise Estate Planning Strategies

Like many Floridians, you want to protect your home for future generations to enjoy. There are plenty of ways you can protect and pass on your wealth; using a trust may or may not be the right route for you and your family. Our firm wants to help you figure that out so your estate plan is airtight. Ready to speak with our legal team? Get in touch with us here today!