You probably have begun estate planning on your own and are asking yourself, should I transfer real estate into a trust? What can be the advantages and disadvantages of doing this? Of course, funding assets into a trust has so many advantages. Due to how complex trusts are, this article aims to help you understand the consequences of transferring real property into a trust and how you can get it done.

Advantages of transferring real estate into a trust

The advantages of funding real estate into a trust include probate avoidance, tax savings and asset management.

Any asset you fund into a trust will automatically escape probate. Possibly you already know how problematic and expensive probate can be and you would be glad to realize that funding your house into a trust will allow it pass to your loved one without having to go through the court.

If your state imposes inheritance and estate taxes to property, then you may want to find ways to limit how much your loved ones would be paying as tax. Living trusts do not make you free from tax since they are revocable, and you cannot fund real property you’re using into an irrevocable trust. However, if your trust is well-designed by an estate planning attorney with an eye towards tax savings, then your final tax liabilities will be minimized to a considerable extent.

Disadvantages

How to transfer real estate into a trust

To transfer real property into a trust, you have to sign a new deed that transfers ownership; that is, the trust will now be the owner of the house rather than you.

The best way to go about this is to get an estate planning attorney to do it for you. This is because of the formalities involved and to avoid mistakes.

You have to get a deed document. Your attorney can provide this or else you get it online. It must be for your specific state.

After all information is adequately filled, you should then notarize the deed. Those directly involved must also sign.

You must then take the document to the office that keeps records of local property. They will make a copy of the document and keep it. They will stamp the original and give back to you.

Different states handle real property taxes differently. Most states do not request a tax so long the property is not bought with money. Some other states consider the fact that the owner doesn’t change since you as the trustee is still the owner of the property, but will impose tax when the trust becomes the new owner. You should find out this information about your state online.

Most real property have insurance policies covering them. Since ownership has changed, you should inform your insurance company to make the necessary changes in their document, such as the owner of the real estate. These changes would not affect the terms, cost and coverage of the policy.

Get help from an estate planning attorney near you

If you live in New York, our New York estate planning attorneys can offer you professional guidance in transferring your real estate to your living trust. Simply contact our law office today.

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