Yahoo Life’s recent article entitled “Why You Should Put Your House in a Living Trust” explains some of the most significant errors people make with trusts.
Remember that a trust is a fiduciary relationship in which one party (trustor) gives another party (trustee) the right to hold title to property or assets for the benefit of a third party (beneficiary).
Trusts are created for these reasons:
- To provide legal protection for the trustor’s assets
- To be sure that those assets are distributed according to the trustor’s wishes
- To save time and reduce paperwork;
- To avoid probate, and
- In some instances, to avoid or reduce inheritance or estate taxes
Also, remember that although trusts are generally associated with the wealthy, they are highly versatile instruments that you can use a trust for various purposes to achieve specific goals.
Common Mistakes Include:
Failing to retitle your home. If you don’t retitle your home or transfer the deed into the name of the trust, you paid a lot of money for a piece of paper. The trust is empty because the deed hasn’t been transferred. Therefore, it is not covered.
Failing to notify tenants of the ownership change. If you’re retitling a two- (or multi-) family home into the trust, and the property has rent-paying tenants, you need to inform them of this change in landlord for rent payment purposes. You’ll also need to set up a bank account in the name of the trust for rent deposits.
Failing to tell the insurance company of ownership change. Be sure to tell your home insurance company about retitling to a trust. If not, the insurance company may deny your claim in an event because the actual property owner—your trust—wasn’t insured.
Don’t make these mistakes. Work with an experienced estate planning attorney.
Reference: Yahoo Life (Jan. 10, 2022) “Why You Should Put Your House in a Living Trust”