As you start working on your estate plan, one thing you may want to do is to protect your family home. In the event that you’re ever significantly in debt or you don’t have your financial affairs in order, there is a risk that your home could be lost.
Fortunately, there are trusts that can help you protect your property, pass it on to a beneficiary and minimize the risk from creditors. Trusts may also help you lower the overall value of your estate so you reduce the likelihood of your heirs having to pay taxes on your estate.
What kind of trust should you use for your home?
There are many trust options, but you may want to place your home into an irrevocable trust. This trust takes your home out of your name and places it in the care of a trustee. Later, when you pass away, the asset is then passed on to the beneficiary you choose.
An irrevocable trust is ideal because it helps you avoid estate taxes, removes the property from your name to make it untouchable by creditors and sets up a transfer to a beneficiary to probate.
How many trusts do you need in your estate plan?
The truth is that a comprehensive estate plan may have several trusts that protect different assets or that are set up to transfer assets to different beneficiaries. Your attorney will talk to you about your options so you can decide if having an irrevocable trust is the right choice for you or if you want to continue exploring other options to meet all your estate planning needs.