What You Need to Know About Living Trusts and Real Estate
When it comes to estate planning and protecting your home, Living Trusts are a powerful tool many homeowners consider. Often recommended by estate planners and financial advisors, these trusts help you manage your assets during your lifetime and control how they're passed on after your death.
But what exactly is a living trust—and how does it work when it comes to owning real estate?
Let’s break down the basics, the benefits, and the things you need to be aware of when holding property in a trust.
A Living Trust—also called an Inter-vivos Trust—is a legal arrangement you create during your lifetime to manage your property and assets. The people who create the trust are called Settlors or Trustors. They usually also act as the Trustees (managers of the trust) and the primary beneficiaries during their lives.
Once the Settlors pass away, the trust is either closed or continues to distribute its assets to the next beneficiaries—usually children or grandchildren.
This is a common misconception: a trust itself doesn’t hold the title— the Trustee does, on behalf of the trust. So when a home is “in a trust,” it’s actually titled in the name of the Trustee acting for the trust.
Many homeowners choose to put their property into a living trust for several reasons:
Avoiding Probate: This is one of the top reasons people use living trusts. When you pass away, your property can be transferred to your beneficiaries without going through probate court.
Tax Advantages: Depending on how the trust is structured and your marital status, you may be able to postpone or reduce estate taxes.
Privacy: Trusts are private documents, whereas probate is a public process.
Protection from Certain Creditors: Some unsecured creditors may have a harder time accessing assets held in trust.
⚠️ Note: Always consult with a qualified attorney or accountant to see if a trust is the right choice for your situation.
Yes—if you’re the Trustee and your trust allows it, you can refinance or borrow against your home. But keep in mind that not all lenders will finance properties held in trust, so check with your lender first.
You Can Still Homestead: If your home qualifies for homestead exemption, holding it in a trust won’t change that.
Watch Out for “Hidden Trust” Arrangements: Sometimes people want someone else to hold title “in trust” to keep their name off record. This is legally risky and not recommended. Only the official Trustee can legally act on the property, and private arrangements are not recognized by title insurers.
Title Companies Have Requirements: If you’re selling or buying a property in a trust, expect extra documentation. Title companies will ask for the trust agreement and may need confirmation of who the authorized Trustee is.
Living trusts can be a smart, efficient way to manage your property, reduce legal delays, and plan for the future. But they’re not one-size-fits-all. The best approach is to speak with your estate attorney or financial advisor to weigh the pros and cons for your unique situation.
If you’re planning to buy or sell a home in a trust—or simply want to prepare your real estate for the future—understanding how living trusts work is a great first step toward peace of mind and smarter ownership.
📞 Have questions about selling or buying real estate held in trust? Let’s talk. We can help you navigate the process smoothly and securely.
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