Do You Have Your Home in a Trust? Here’s Why It’s Worth Asking the Question

First, an important disclaimer: I am a real estate professional — I am not a trust or estate attorney, CPA, or tax professional. Nothing in this article should be considered legal or tax advice. Every situation is different, so questions about creating a trust, taxes, inheritance, or estate planning should always be discussed with the appropriate qualified professional.

With that said, as a Realtor, I work with homeowners who have owned their homes for many years, and one subject that comes up frequently is trusts.

And sometimes the conversation starts with a surprisingly simple question:

“Is your home in a trust?”

The answer is often, “I’m not sure.”

Table of Contents

1. What Is a Living Trust?
2. Why Do Homeowners Put Property in a Trust?
3. Having a Trust Isn’t Necessarily Enough
4. What Happens When It’s Time to Sell?
5. What If You’ve Owned Your Home for Decades?
6. A Simple Homeowner Checkup
7. The Real Estate Side of the Conversation

1. What Is a Living Trust?

In very simple terms, a living trust is an estate-planning tool that can hold assets, including real estate.

Many homeowners establish a trust so their property can be managed and eventually transferred according to their wishes. Depending on the circumstances, a properly structured and funded trust may also help avoid probate.

But creating a trust document and actually placing your home into the trust are not necessarily the same thing.

That distinction can become very important.

2. Why Do Homeowners Put Property in a Trust?

People have many different reasons for creating trusts.

For some, the goal is making things easier for their family. For others, it’s part of a larger estate plan. A homeowner may want to specify who will manage their property if they become unable to do so or how their assets should be distributed after their death.

Trusts can also have significant legal and tax implications, which is exactly why this is an area where you should get advice from an estate-planning attorney and tax professional rather than relying on general information from friends, family, or the internet.

3. Having a Trust Isn’t Necessarily Enough

Here’s something homeowners sometimes overlook.

You may have had an attorney prepare a trust years ago, but was the property actually transferred into the trust?

Real estate ownership is reflected on the property’s deed. If you’re unsure how your home is currently titled, that’s something worth checking.

Life changes, too. People refinance, buy another property, lose a spouse, remarry, or make other changes over the years. An estate plan created 15 or 20 years ago may deserve another look.

That doesn’t necessarily mean anything is wrong. It simply means it’s worth periodically reviewing your documents with the appropriate professional.

4. What Happens When It’s Time to Sell?

This is where the trust conversation intersects with real estate.

When a property held in a trust is sold, the real estate agent, title company, and other professionals involved in the transaction may need information regarding the trust and the individuals authorized to act on its behalf.

If the original trustee has passed away or can no longer act, additional documentation may be necessary to establish who has authority to sell the property.

Finding these things out before a home goes on the market can make the process much easier than discovering an issue after you’ve already accepted an offer.

5. What If You’ve Owned Your Home for Decades?

This is especially important for longtime homeowners.

If you’ve lived in your Bay Area home for 20, 30, or even 40 years, chances are quite a few things have changed since you purchased it.

Your home’s value may have changed dramatically. Your family circumstances may be different. Your retirement plans may have changed. You may now be thinking about downsizing, moving closer to children or grandchildren, or simply creating a plan so your family knows what to do in the future.

You don’t have to be ready to sell your home to start asking these questions.

In fact, before you need to make a major decision is often a much better time to get organized.

6. A Simple Homeowner Checkup

If you haven’t looked at your estate documents in a while, here are a few questions you may want to ask yourself:

• Do I currently have a trust?
• Do I know where the original documents are?
• Is my home actually titled in the trust?
• Who is named to handle things if I cannot?
• Have there been major family or financial changes since the trust was created?
• Has my estate-planning attorney reviewed my plan recently?
• Do I need to speak with my CPA or tax professional before making decisions about my property?

You don’t need to know all the answers today.

Sometimes the most important first step is simply knowing which questions to ask.

7. The Real Estate Side of the Conversation

As your Realtor, my job isn’t to tell you how to structure your trust or what you should do for tax purposes.

My role is on the real estate side of the table.

If you’re considering selling, downsizing, or planning for a future move, I can help you understand your home’s current market value, what preparing the property for sale might involve, and what the real estate process would look like.

Then your attorney, CPA, financial advisor, and other professionals can advise you in their respective areas.

You don’t have to have everything figured out before starting the conversation.

Sometimes it begins with something as simple as:

“I’ve owned my home for 30 years. What should I be thinking about now?”

That’s a conversation I’m always happy to have.

Selma Michael, Realtor®
DRE #01339617
510-517-2346
selmamichael.com
Serving The Greater Bay Area