Living Trust

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 Estate planners often recommend Living Trusts as a practical and effective way to hold title to real property. A Living Trust can help manage assets during your lifetime and ensure a smoother transfer to your beneficiaries after death. When property is held in a Living Trust, title companies have specific requirements to facilitate the transaction. While this information addresses many common questions, please reach out to your title company representative or consult legal counsel for guidance on matters not covered below.

 A Family Trust is a common type of trust in which the Husband and Wife typically serve as Trustees, and their children are the beneficiaries. The individuals who create the trust and transfer their property into it are known as Trustors or Settlors. The Settlors generally appoint themselves as Trustees and are the primary beneficiaries during their lifetime. After their passing, the children (and potentially grandchildren) typically become the primary beneficiaries. If the trust is designed to continue beyond their death, the beneficiaries will receive distributions from the trust; otherwise, the trust may close once distributions are made. 

 A Living Trust, sometimes referred to as an Inter Vivos Trust, is established during the lifetime of the Settlors (as opposed to being created by a will after death). The trust generally terminates upon the Settlors' passing, at which point the assets within the trust are distributed to the designated beneficiaries. 

 While a trust itself cannot hold title to real property, the Trustee manages the property on behalf of the trust. The Trustee is the legal titleholder of the property, but it is held in trust for the benefit of the beneficiaries.

 Whether a trust is the best way to hold your property depends on your specific circumstances. Common reasons for holding property in a trust include minimizing estate taxes, avoiding the probate process, and shielding assets from certain creditors. However, only an attorney or accountant can provide personalized advice regarding your situation. 

 A Living Trust can help minimize estate taxes, and married couples may be able to exempt a significant portion of their estate from taxation. Additionally, taxes can often be deferred after the passing of the first spouse. It is essential to consult with your attorney or accountant to understand the full tax implications before making any decisions. 

 Yes, property held in a trust can qualify for homestead exemption, provided it meets the necessary qualifications under state law. 

 A Trustee generally has the authority to borrow money or encumber real property, as outlined in the terms of the trust agreement. However, not all lenders will finance property held in a trust, so it’s important to confirm with your lender beforehand.