Many people use a living revocable trust because it gives them more control over trust assets. Putting your house in a revocable trust allows you to change the terms of the trust or remove the house from the trust if you wish. Taxes and personal finances are generally easier to manage with a revocable trust. A revocable trust becomes irrevocable after your death as you can no longer close it.
As mentioned above, one of the biggest advantages of putting a house in a trust is that, unlike a will, a living trust allows you to avoid probate court. There are three main reasons why this is important. The main reason people put their home in a living trust is to avoid the costly and lengthy probate process upon death. Leaving real estate assets to a spouse or children in a will causes those assets to pass through probate.
The process may take a few months or even a year, and some estimates put the costs of legalization at 3% to 7% of the value of the inheritance. This becomes especially important if you own real estate in several states. Each state will have its own probate procedures that can be costly, time-consuming, and also completely avoidable. When homeowners in Colorado hear about living trusts, they often have a lot of questions about them.
The benefits of these estate planning tools are often enough to persuade homeowners to create them, although they do require a little extra work and a little more discipline. If you were wondering how you could use a living trust to own your home, here are several questions you could have asked yourself. The actual steps you'll have to take to sell your home in Colorado won't be significantly different from what you would have if you own the property as an individual. For example, let's say you've decided to sell your house.
To successfully transfer title to new owners, you will need to complete all the paperwork that is normally required every time someone buys or sells a property. The difference comes when you sign your name on documents. As an individual owner, you would sign with your name as the person who owns the property. However, since the living trust is now the homeowner, you can no longer sign as an individual.
Instead, you will have to sign your name as a trustee. While this may seem inconsequential, it is important to transfer all of the trust assets properly so that you can get the maximum benefit from your living revocable trust. Your living trust will allow your property to avoid probate and allow you to keep your affairs private, but will not give you asset protection. If asset protection is important to you, you should talk to your estate planning lawyer about creating one or more types of irrevocable trust.
If you would like to learn more about trusts and other estate planning tools, visit our seminars page to learn more about upcoming free seminars in Colorado Springs and also in the Castle Rock area. Putting your assets in an irrevocable trust means that they are protected from creditors and stay away from estate taxes. The assets of an irrevocable trust cannot be seized by creditors and are not subject to estate tax, which is beneficial as assets. A properly funded revocable living trust can allow your estate to avoid probate, saving your family the time and expense involved in the probate process.
Putting the property in a revocable trust will not affect personal residence, exclusion from home sale or interest deduction. But a successor trustee (such as the trust spouse) chosen by the trust can manage the finances and assets of a living revocable trust, as opposed to a judge-appointed guardian who becomes a trustee if the trustee is incapacitated. In most situations where a Colorado homeowner creates a revocable living trust, that landlord will transfer title to the property to the trust name. You don't need to transfer your car to your revocable living trust, unless the car is worth a lot of money and significantly increases the value of your estate.
Because you can access trust assets at any time, a revocable trust does not provide asset protection to creditors or remove housing from your taxable estate upon death. If you create a living revocable trust, but don't transfer your assets to it, you won't prevent probate probate. The general idea is that you should transfer all your assets to your revocable living trust, but sometimes that's not practical. Today, many people prefer a revocable living trust rather than a will as a central component of their estate plan.
Therefore, your beneficiaries may have to pay estate taxes on assets in your revocable trust after your death. And for the same reason that your estate remains taxable, creditors can also seize the assets of a revocable trust. In most states, transfers of real estate to revocable living trusts are exempt from transfer taxes that are usually imposed on transfers of real estate. .