Introduction: When it comes to passing real estate between generations, there are a plethora of options available. However, setting up a family trust is widely regarded as one of the easiest and most effective avenues. With proper estate planning and the guidance of a wealth advisor, you can ensure a smooth transfer of your home, business, or investment real estate.
Pros and Cons of Putting Family Real Estate Into a Trust
However, there are a few drawbacks to consider. For instance, when you put an asset in a trust, you may encounter challenges with lenders if you plan to refinance your home. You might temporarily need to remove your property from the trust to facilitate the refinancing process. Transferring assets also requires paperwork and may involve attorney fees. Nonetheless, the time and costs associated with setting up a trust are significantly less compared to the probate process.
How Do I Set Up a Family Trust for Real Estate?
- Take Inventory: Create a list of all the real estate assets you wish to include in the trust.
- Gather Paperwork: Collect any necessary documents associated with the assets, such as deeds and insurance policies.
- Name Beneficiaries: Decide who will receive the assets in the trust when you pass away. Consider how you want to pass your wealth to your children and grandchildren, and explore the possibility of maximizing the transfer.
- Name a Trustee: While you're alive, you can act as the primary trustee. However, your living trust should specify a successor trustee who will manage and distribute assets after your passing. It may be wise to choose a corporate trustee to ensure stability in case your initial choice becomes unavailable.
Is Putting Real Estate Into a Will an Option?
Yes, transferring real estate through a will is an option. However, wills are subject to probate court, resulting in potential delays in the transfer of ownership. Will stipulations can also be challenged by parties who disagree with them. On the other hand, trusts are often active from creation and allow for changes in asset allocation while the grantor is still alive. A trust also offers privacy and protection from creditors, making it a superior option for asset preservation.
How a Family Limited Partnership Can Also Transfer Real Estate
Setting Your Family up For Success
When it comes to passing real estate between generations, setting up a family trust stands out as one of the easiest and most effective options. By engaging in proper estate planning and seeking guidance from a wealth advisor, you can ensure a seamless transfer of your home, business, or investment real estate. Consult with Polaris Wealth Advisory Group today to learn more about incorporating living trusts into your estate plan.
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