Living Trusts

Living Trusts are often recommended by estate planners as a strategic means of holding title to real property. Understanding the basics of Living Trusts and their implications for real estate transactions can help individuals make informed decisions. Here are some commonly asked questions and answers regarding Living Trusts:

Who are the parties to a Trust?

In a Family Trust, the Husband and Wife typically serve as Trustees, while their children are the Beneficiaries. The individuals who establish the trust and transfer their property into it are known as Trustors or Settlors.

What is a Living Trust?

Also known as an Inter-vivos Trust, a Living Trust is created during the lifetime of the Settlors and typically terminates after their death, with the Trust assets distributed to the beneficiaries.

Can a Trust hold title to Real Property?

No, the Trustee holds the property on behalf of the Trust.

Is a Trust the best way to hold my property?

This is a decision best made in consultation with an attorney or accountant. Common reasons for holding property in a Trust include minimizing death taxes, avoiding probate, and protecting property from certain creditors.

What taxes can I avoid by putting my property in trust?

Married individuals may be able to exempt a significant portion of their assets from taxation and may defer taxes after the death of the first spouse. Professional advice from an attorney or accountant is recommended.

Can I homestead property that is held in a Trust?

Yes, if the property meets the eligibility requirements for homesteading.

Can a Trustee borrow money against the property?

Trust Agreements typically grant Trustees the authority to borrow against and encumber real property held in the Trust. However, some lenders may have restrictions on lending to properties held in trust.

Can someone else hold title for me “in trust?”

Private arrangements with a third-party Trustee may not be legally advisable, as the Trustee of record is the only one empowered to convey or borrow against the property. Title insurance may not protect against actions taken by a Trustee who does not adhere to the Settlor's wishes.

Understanding the intricacies of Living Trusts and their implications for real estate ownership is essential for making informed decisions about estate planning and property management. Consulting with legal and financial professionals is recommended to address individual circumstances and objectives.