To put a house in trust is to designate a third party to hold it for another's beneficiaries. Fidelity Investments explains that the trust is created through the execution of a document that describes how the property is to be treated after the decedent’s death.Know More
The individual who creates the trust is the grantor, and the individual or entity that holds it is the trustee. The trust is established under the trustee’s name. CNN Money notes that ownership of the property is transferred to the trust.
According to Nolo, a trust allows the homeowner to set conditions for the home's passage to beneficiaries. For example the trust's grantor may specify that a child shall receive the home only after graduating college. The grantor can also mandate that a grandchild receive the home after the child's parents die.
A grantor who creates a revocable trust retains control over the home as its trustee or appoints a trustee. The grantor can make changes to the revocable trust's terms, according to Fidelity Investments. SFGate notes that an irrevocable trust usually requires the appointment of a trustee to hold the house. The grantor waives the right to change the irrevocable trust.
Fidelity Investments stresses that laws governing the establishment and management of trusts vary by state. Generally, however, the primary reason to put a house in trust is to keep it out of probate, according to SFGate. Probate, which is the legal process through which a decedent's property is distributed to beneficiaries, is time consuming and expensive, and the court decides how property is to be divided. Trusts may also offer tax savings, but any such benefit depends on the type of trust and its terms.Learn more about Credit & Lending
If a house is repossessed by the mortgage company, it is usually sold through an auction or a real estate agent. Depending on both the mortgage company and the state, the former owner may have the opportunity to redeem the property. If the home sells for less value than the outstanding mortgage, the former owner may be sued by the lender for the difference or have the debt forgiven.Full Answer >
Keeping a house after filing bankruptcy is possible. It depends on the type of bankruptcy and where it is filed because states have different rules. There is no answer that covers all cases, as explained by Nolo, FindLaw and Bankrate.com.Full Answer >
Some of the advantages of a living trust are being able to avoid probate and being able to name alternate beneficiaries to inherit property, says Nolo. Disadvantages of living trusts include the time they take to draw up and the amount of extra maintenance required when compared to a will.Full Answer >
A family trust is an allocation of funds or assets made to the beneficiaries with some conditions attached, according to USA.gov, the U.S. government's official web portal. The family trust is managed by the trustee who has the power to release funds to the beneficiary if the conditions of the trust are met.Full Answer >