People sometimes get revocable living trusts because they have read somewhere that they should. While that is often the case, it is important to understand the legal reasons for getting the trust and how getting one relates to other estate planning instruments.
The legal implications of holding a property in a revocable living trust are not always commonly understood even by those people who have trusts. One example of that comes from a recent Trust Advisor article “Think Twice About Changing a Revocable Trust to List Your Child as Co-Owner of a Home.”
An elderly man wrote in and said he had a revocable trust and had transferred his home into the trust. After he passes away, his son would become the beneficiary of the trust including the home. The man sought advice on how to change the title of the home now to make his son a co-owner of the home along with the trust. The article explains many reasons why that is not only unnecessary, but potentially harmful.
While it is not clear exactly why the man wanted to change the title of his home, it probably stems from a common confusion and fear of probate.
Many people hear they can avoid having their homes go through probate after they pass away if they make a child a co-owner. That is true, but usually a bad idea especially if the home is already in a trust. If a home is in a trust, then it will not have to go through probate when the current trust beneficiary passes away.
It is important to get a revocable trust from an experienced estate planning attorney who can explain to you the legal implications of the trust. If you have any questions later, you can always call the attorney and ask.
Reference: Trust Advisor (Oct. 28, 2016) “Think Twice About Changing a Revocable Trust to List Your Child as Co-Owner of a Home.”
Suggested Key Words: Trust, Estate Planning, Probate