Putting your house in a trust can have many advantages, but there are also some drawbacks to consider. Setting up a trust is a time-consuming and potentially expensive process, as you must file additional legal documents and pay the appropriate fees. Additionally, when you create a living trust, you must appoint a successor trustee who will manage your assets if you become incapacitated. The main benefit of putting your house in a trust is that it bypasses probate when you die.
All other assets, whether or not you have a will, will go through the probate process. Creating a living trust is not difficult or expensive, but it does require some paperwork. The first step is to create and print a trust document, which must be signed before a notary public. In most states, transfers of real estate to revocable living trusts are exempt from transfer taxes usually imposed on transfers of real estate.
However, in some states, transferring real estate to your living trust could result in a tax. By placing your home in an irrevocable trust, you can qualify for Medicaid by reducing your taxable wealth. This can be beneficial if you are looking to minimize estate taxes. However, it is important to consider all the implications of what it will mean for you to stop being the legal owner of the assets you place in the irrevocable trust.
A well-made trust can also give you more control over when and how your home is transferred to another person. To put your house in a trust, you must prepare and sign a new deed transferring ownership to you as a trustee of the trust (or, in Colorado, to the trust itself). You and any other homeowner must sign the deed before a notary public (for a small fee) to authenticate the deed. Finally, register the transfer of ownership with the county clerk's office, which maintains local property records in your area. In conclusion, putting your house in a trust can have many benefits, but it is important to consider all the potential downsides before making this decision.
Make sure that the instructions in your will and trust agree and that you understand all the implications of what it will mean for you to stop being the legal owner of the assets you place in the irrevocable trust.