How to Protect Your Family Home with a Living Trust in New York
Estate planning lawyers often advise clients to establish a trust and transfer property to it, because trusts are non-probate assets. This means that, after you die, the property in the trust will not become part of your estate as administered by the probate court. During probate, the estate must pay income taxes, and the personal representative must invite creditors to seek repayment of debts. That means that any property in your estate can only go to your heirs after creditors and the IRS have taken their share. Trusts have a reputation for being for wealthy people, but they are also useful for people who do not have enough retirement savings for long-term care and will likely eventually need to enter nursing homes as Medicaid beneficiaries. If you want your children to inherit your house, instead of Medicaid forcing your estate to sell it and pay most of the proceeds to reimburse Medicaid for your long-term care, then the best way to achieve that is by transferring ownership of your house to a trust. If you are considering establishing a trust to protect your family home from creditor claims during probate, contact a Bronx estate planning lawyer.
How to Establish a Trust
The person who establishes a trust is called the grantor. As the grantor of a trust, you bring the trust into existence by writing a document called a trust instrument. It indicates the names of the trustees, who have the authority to make transactions with the trust assets, and the beneficiaries, who receive money and other property from the trust. The trust instrument also contains other instructions about which transactions the trustees are authorized to make and what happens to the remaining assets when the trust dissolves. Once you write and sign the trust instrument, you should apply for a taxpayer ID number for the trust, because it is its own legal entity, much like a business is.
How to Transfer Your House to a Trust
After you establish the trust, you can sign a transfer of deed document, in which you indicate that the trust is the new owner of the house. You must sign this deed transfer document in the presence of a notary. If you still owe a mortgage on the house when you transfer it to the trust, notify the mortgage lender about the transfer.
Can You Get Your House Back From the Trust If You Change Your Mind?
If the trust is revocable, you can take property into and out of it as many times as you choose. You can also modify the trust instrument. The property in a revocable trust does not become legally separate from the grantor until the grantor dies. By contrast, an irrevocable trust becomes legally separate from the grantor as soon as the grantor signs the trust instrument. If your house belongs to an irrevocable trust, the only way to get it back to being your property instead of the trust’s is to dissolve the trust.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can help you revise your estate plan to include a revocable trust to protect your family home. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
Source:
lawhelpny.org/resource/living-trusts