Should your home and realestate be placed in a trust

Submitted by Deena Wagner on Thu, 2018-04-12 12:59

I own two homes. One is my domicile and the other is a vacation home. Should one or both b placed in a trust? If so, what type of trust.



Submitted by Bruce Steiner on Thu, 2018-04-12 16:41

Perhaps a QPRT if you want to save estate taxes, at the cost of giving up the income tax basis step-up.  What are you trying to accomplish?  

Submitted by Deena Wagner on Thu, 2018-04-12 22:46

 I am trying first and formost to avoid probate and its associated costs and time.  I have been told that I need to put the realestate in a trust to avoid probate.  I am also being told that any investment accounts, IRAs (both Traditional and Roths) do not go through probabate.  It was also stated that only the Real Estate goes through probate – not any of the investment or IRA or Roth go through probate.  All investment, IRA, Roth, and bank accounts do have named beneficiaries.Thank you for your help.

Submitted by Alan - IRA critic on Fri, 2018-04-13 00:07

Might be worth checking to see if the state in which these properties are located have authorized “beneficiary deeds” for real estate. There are a few states that do, but most do not. If your state offers these, you record a beneficiary deed with your local county recorder’s office and the properties will then pass outside of probate. This costs very little and in some cases nothing.

Submitted by William Tuttle on Fri, 2018-04-13 01:02

They are now available in a slight majority of states. It is still a good idea to get advice of an estate/trust lawyer in your state to make sure you have a total plan that makes sense. There are many situations where having simple beneficiaries of all assets is not an optimal estate plan.

Submitted by Deena Wagner on Fri, 2018-04-13 15:00

Thank you for you responses.  I live in FL and should have included that info.  As far as the basis step up, my hone would have very little step up.  Bought just before the RE crash and prices are just now getting back to that level.  However, the vacation home is of concern and I had not thought of this.  I actually do not yet own the vacation home.  I will be inheriting it soon ( it has been in the courts hands for 1 and 1/2 years now)  It will need to be rehabed which will increase it’s value by about $100,000. Additional info – I am 81 years old an a widow.

Submitted by William Tuttle on Fri, 2018-04-13 15:32

  • Florida does not have a beneficiary or TOD deed. However, it does allow an enhanced life estate deed, or “Lady Bird” deed, that functions like a transfer-on-death deed.
  • I am not familiar with FL laws. In some states they act like mini Medicaid trusts just for the real estate. With your age that may be a good option.
  • You should check with a lawyer. II believe  Bruce Steiner a fairly frequent poster here and esate/trust lawyer is licensed to practice in FL.

Submitted by Deena Wagner on Tue, 2018-04-17 13:20

Thanks for all your help.  I will check on the items you mentioned.

Submitted by Bruce Steiner on Sun, 2018-04-22 01:03

  • You probate the Will, not the assets.
  • In most states, probating a Will is not particularly difficult, expensive or burdensome.  It’s not worth trying to “avoid.”
  • Revocable trusts are overhyped and oversold, and for most people, in most states, are not necessary, and tend to be a distraction.  You should focus on the substantive issues (whom you want to provide for, and how to provide for them so as to minimize taxes and protect assets) rather than the procedural (stuff like probating Wills).

Bruce Steiner

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