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
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