Should You Use A Trust To Buy Your Next Home?
When you are shopping for a home, your attention is more than likely solely focused on that task. However, you also need to think about the future. It is not too early to start considering who inherits your home when you die. For some homebuyers, the answer lies in setting up a trust and buying the home through it. If you are thinking of taking this action, you should weigh the pros and cons.
Why Should You Buy Your Home Through a Trust?
There are several reasons that buying the home through a trust makes sense, but one of the most beneficial is that the property can avoid probate in the future. Instead of your children or grandchildren having to wait to take possession of the home, the trust can distribute the ownership of it to them immediately following your death. Not only will they avoid a wait period while they wait for probate to complete, but their legal fees will be lower.
Buying the home through a trust also gives you privacy that other homebuyers do not get. Without a trust, anyone conducting a title search will find out you own the home. However, with a trust, the name of the trust would appear as the owner.
In addition to these benefits, a trust will help protect the home from judgments and liens. If any of your heirs have judgments or liens against them, the property can remain in the trust until they have settled their legal problems without fear of losing the home.
What Are the Disadvantages of Using a Trust?
Even though buying the home through a trust has various benefits, there are some disadvantages to factor into your final decision. One in particular is the tax rate the trust could face. The tax rate for the trust on the property could be higher than it would be if the home were owned by an individual instead.
Another issue is that if you use an irrevocable trust, once the home is bought through it, you cannot make changes. Whoever the trustee is for the property could have more power over the property than you would. If you do opt for the trust, choose a trustee that you completely trust.
Before making a decision, consult with a real estate attorney from a firm like Thomason & Hessmer. He or she can offer sound advice on whether or not a trust would be best in your homebuying situation.