Holding Property in Living Trust
Those who own property may have a heard of a living trust before. This is a viable option when it comes to deciding how the title of your property will be transferred. A living trust can be used to transfer this property to children or other loved ones in the event that you pass away.
When a property is held in a trust, title companies have requirements to fulfill. This is so they can get the transaction started. If you need general information, you can ask for it from the title company itself.
What is a Living Trust?
A living trust is generally a family trust. This trust is where a spouse or spouses are the trustees and their children are the beneficiaries. The creators of the trust, and those transferring the property, are the trustors. They are also the primary beneficiaries during their lifetime.
The trust will usually end after both of the trustors have passed away or have become disabled or incapacitated. This will be specified within the terms of the trust itself. When this happens, the trust is distributed to the children or the person named as beneficiary.
A living trust is a more tax-efficient way for dividing property than a standard will tends to be. Know the differences between the two to determine which is better for your needs.
Reasons for Holding a Property in Trust
There are several reasons that you would want to hold a property in living trust. The first is to avoid a lengthy probate. When dealing with a family loss, the last thing they want to deal with is the distribution of property.
The trust also shelters that property from certain unsecured creditors. This is beneficial so that the property can pass to the trustees without worry of it being claimed by those unsecured creditors. It also minimizes or postpones death taxes, too.
A trust will also allow for married persons to exempt a large part of their assets from taxation. It can also postpone those taxes until after one of the spouses has passed away.
Lastly, it authorizes the trustee to borrow against the property. This is laid out in the terms of the trust and there are exclusions and restrictions based on the terms of the lender. Look into these before borrowing against the property.
A living trust can be a great option for ensuring that property transfers in the event of your death or a spouses’ death. Consult your lawyer to discuss the terms of this trust and how it can be beneficial to you and your family.