Protect Your Home With A Trust

Trusts are important for any homeowner, not just the wealthy.

FIRST, WHAT IS A TRUST?

A trust is a fiduciary arrangement in which a grantor transfers their own property to a third party, or trustee(s), to hold for the benefit of another, the beneficiaries.

Trusts may be revocable or irrevocable, and may be in effect during life or testamentary, to take effect when the grantor is deceased.

WHY PUT REAL ESTATE INTO A TRUST?

1. Avoid probate. This is a big one. When a California property owner dies, most assets not held in Trust must be administered and distributed under court supervision as designated in the decedent's Last Will and Testament. If no will exists, State law governs the administration and distribution. Unfortunately, this process causes delays and can eat up a large portion of the estate.

The costs associated with probate are based on the total value of the asset, not the net value after liabilities. For example, if you own a home worth $1,000,000 but owe $950,000 on your mortgage, the value for probate costs is still $1,000,000. In that case, probate would cost $21,000 in statutory fees, plus court costs and fees. As you can see, probate can be very expensive.

Probate will take between six months and two years to complete. During that time, the asset is held up and has not been distributed to your heirs.

2. Avoid reassessment for tax purposes. Usually, a change in ownership causes the property to be reassessed for property taxes, unless a parent/child or other exclusion applies. Transferring the home to a beneficiary through a revocable trust does not cause reassessment. This means that your beneficiary won’t get stuck with higher property tax payments, even if the home has appreciated in value over the years.

3. Ensure your wishes are honored. With a trust, you have full control over exactly what happens to your property when you pass.

4. Protect your property if you are incapacitated. With a trust, you are able to designate someone to handle your financial affairs, allowing you protection should you become incapacitated.

5. Possible savings on estate taxes. Finally, a trust can help you to save, or avoid, Estate Taxes. For more details on how, contact Elizabeth A. Tresp, Attorney at Law today.

ARE THERE DISADVANTAGES?

The only possible disadvantage is the potential inconvenience imposed by some financial institutions. If you ever need to refinance or sell your home, your financial institution may require the additional step of having you transfer the property out of trust and back to you personally in order to sell it. If you are refinancing, some banks may require you to transfer the property back to you personally for the refinance, and then you can transfer it back into the trust. But doing so is very simple and quick.

NEXT STEPS

Call Elizabeth A. Tresp, Attorney at Law today at 888-814-5552 or email us. We have offices in Solana Beach and Pacific Beach. Protect your home and family with a trust today. 

PRACTICE AREAS

Estate Plans are Critical for Singles

Most people understand the importance of an effective Estate Plan for the “married with children” portion of the population. Few think about the divorced, widowed, and singles. For these groups, an Estate Plan is just as important!

If you are single, and do not have a valid Will or Trust, your lifetime of accumulations go where the state says they go. Each state sets standard formulas for distribution when a person dies without a Will or Trust, or “intestate”. That means a single person’s estate may be distributed to distant relatives, potentially against the decedent’s wishes, or if there are no relatives, then to the state. Would you want the result of your life’s work to end up in the hands of the state?

The Wall Street Journal recently published an article on this topic, warning, “it can be especially important for single people to work with estate-planning professionals.”

I encourage you to read the Wall Street Journal article, linked below. If you are single, or if you know a single person who does not have an Estate Plan, contact me today for a free consultation. In the New Year, resolve to set aside an hour to discuss with me how to secure your legacy.  

A general Estate Plan will usually include:

  • Pour-over Will
  • Revocable Living Trust
  • Advance Health Care Directive
  • Durable Power of Attorney

Contact me today at 888-814-5552 or send me an email.
http://www.wsj.com/articles/estate-planning-essentials-for-single-people-1417917773

National Estate Planning Awareness Week

Did you know that over 120 million Americans do not have an up-to-date estate plan? 

In 2008, Congress adopted this week, October 20-26, as National Estate Planning Awareness Week. This week is the perfect opportunity to set aside time to plan for your family's future by creating or updating your estate plan. 

To learn more about estate planning, visit the Estate Planning section of our website for more information. Contact Elizabeth today to learn how easy creating or updating your estate plan can be.

When to know you need an Estate Plan

Who needs an Estate Plan? Everyone.

When do you need an Estate Plan? Now.

You may not think you have an estate, but almost everyone does. Your estate consists of your car, financial accounts, life insurances, personal belongings, home, and interest in a business. Your estate is literally everything you own. You want to control where and when your assets go when you pass. Of course, if you don’t have a plan, the state has a plan for you. But you probably won’t like it. 

Read More