Should you put vacation house into trust?
As you know for watching my videos and seeing our articles, I believe the best thing for estate planning is a revocable living trust centered estate plan. However just because it is great does not mean that it’s going to be super easy to do. You still need to put in the work to make certain that you have an estate plan that works correctly and will avoid probate.
KEY TO REVOCABLE TRUST
And that is the key for having a revocable living trust anyway is to avoid probate in most cases. Sure, it is a great way to avoid probate but it is also an awesome way to take care of you during your lifetime.
So the biggest problem I see with revocable living trust is that people fail to fund their trust. What do I mean by funding I trust?
Well, I simply mean that anything that has a title such as real estate, cars, bank accounts, boats, etc.… Needs to be in the name of your trust.
Sometimes people will spend thousands of dollars getting a revocable trust and then they will fail to fund their trust.
Some law firms leave all of the funding to the client. Some Estate planning attorneys will help partially fund the trust for the client. Some law firms will even offer a complete funding package that usually cost thousands of dollars more than the initial trust itself.
The good news is that most people can find trust themselves.
Your estate planning attorney will most likely require that any real estate that you’ve told him about is put into the name of the trust before you leave their office. And that is just a good protection for you to make certain that your real estate is in the name of the trust.
What usually happens is a client will leave their estate planning attorney’s office and then two or three years later purchase a new home or a rental house or some other piece of real estate. And they will forget to put that piece of real estate into the name of their trust.
When that happens they have now failed to fund their trust and if they pass away before that real estate gets put into the name of the trust, then that particular piece of property will need to go through the probate process.
There is no reason to go through the probate process if you have a revocable living trust. Again one of the big attractions of a trust is to avoid probate.
Make certain that when you create your revocable living trust you continue to fund the trust with anything that has a title on it. And always consult with your estate planning attorney and your CPA to make sure you’re doing everything correctly
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