To recap: a living trust is a fiduciary relationship, whereby one party (trustor) transfers legal title of certain assets to the trustee (oftentimes the same as trustor) for the benefit of another(s), the beneficiary. Without need for elaboration on the legal technicalities of the living trust, the following are some benefits to holding your home in trust:
- Avoid Probate & Associated Delays - Probate is a Court Administration Procedure, whereby the court oversees the distribution of assets. The process is expensive (mandatory attorney fees set by statute), lengthy (lasting anywhere between 9 months to 2 years) and can disrupt property management. If your home is in a properly drafted living trust, (along with all other assets which exceed $150,000.00), Probate can be avoided. Instead, when the trustor dies, the trustee will quickly distribute assets to the beneficiary pursuant to the terms of the trust, avoiding the unnecessary costs and delays.
- Maintain Privacy - When one holds assets in a living trust, Probate is avoided and the trust document (if drafted correctly) never gets filed with the court. Therefore the terms of the trust do not become public knowledge, which can provide peace of mind for the trustor and less hassle for the beneficiary. For example, at the time of the late Bing Cosby’s death, multi millions of his fortune were tied up in property. Because Bing Cosby had in place a trust, the type and the location of the property he owned remained private. The beneficiaries who received such property also remained private.
- Maintain Continuous Property Management - In the event of the original trustor/trustee’s incapacity, a successor trustee, as named in the trust by the original trustor/trustee, will take over management of the assets, without having to seek court approval and the costs associated with it.
- Avoid Conservatorship – When provision has been made for your assets including your home, through a living trust, it is highly unlikely that the court would have to be petitioned for someone to take control of your assets. Such petitions are also expensive, with no guarantee that a person whom you trust will be appointed to manage your property including your home.
- Leave Detailed Provision & Instruction For Heirs – Through a living trust, you can make detailed provision for how the property is to be treated/managed upon your incapacity or passing. A living trust enables the trustor to make detailed provision for how a beneficiary takes the property, when the beneficiary takes the property and what title the property shall be held in. One may choose to place the property in an irrevocable trust upon passing, granting right of access to individuals under certain conditions, prior specified. This can provide peace of mind for individuals and couples whose main asset is their home, in that their beneficiaries may be protected from creditor claims and indeed perhaps their own poor lifestyle habits.
A Revocable Living Trust can provide great peace of mind for the homeowner.