It is common to put a home in a trust. It is typical in the estate planing process to consider what to do with a home, and there are several options. It’s common for a large estate to also include a vacation home, or family retreat.
Estate plans that include a revocable trust often will fund the trust by a pour-over will, says Kiplinger’s recent article entitled “Should You Own Your Home in Your Trust?” A settlor (the person establishing a trust) often will title their home to the revocable trust, which becomes irrevocable at death. Or it is also common for couples with a home subject to a mortgage to keep title in their names during their lives and then transfer title of their home to a trust when they die.
Another option is a Qualified Personal Residence Trust, which is irrevocable, to gift a valuable home to a trust for the settlor’s children. With a QPRT, the house is passed over a term of years while the original owner continues to live there, so the gift passes with little or no gift or estate tax.
The most relevant considerations for homeownership in a trust are:
The terms of the trust may require the trustee to ignore some of these considerations. Each situation requires a number of decisions.
Those who want to create a trust should work with an experienced estate planning attorney to avoid any issues. If you live in the Madison, Wisconsin area, schedule a call with Rick Coad to discuss your estate planning needs.
Reference: Kiplinger (Feb. 8, 2022) “Should You Own Your Home in Your Trust?”