When homeowners in Colorado hear about living trusts, they often have a lot of questions about them. The benefits of these estate planning tools are often enough to persuade homeowners to create them, even though they do require some additional work and a little more discipline. If you were wondering about how you might use a living trust to own your home, here are several questions you might have asked yourself.
Question 1. How do I sell a home if it’s owned by the living trust?
That depends on your circumstances, but it usually isn’t a problem. In most situations where a homeowner in Colorado creates a revocable living trust, that homeowner will transfer the title of the property into the trusts name. This effectively means that the trust becomes the legal owner of the home.
So, if the homeowner wants to sell the home, it has to direct the trust to do so. This isn’t typically a problem because in most revocable living trust situations, the homeowner also serves as the trustee. As the trustee, the homeowner has the legal authority to manage trust property. This allows the homeowner/trustee to transfer title of the property out of the trusts name and into the new owners name if the homeowner decides to sell.
Question 2. Does owning my home through a trust make selling it more complicated?
Only very slightly. The actual steps you will have to take to sell your Colorado home will not be significantly different than if you own the property as an individual.
For example, let’s say you’ve decided to sell your home. To successfully transfer the title to the new owners, you’ll have to go through all the paperwork normally required whenever someone buys and sells property.
The difference comes when you sign your name on the documents. As an individual homeowner, you would sign your name as the person who owned the property. However, since the living trust now owns the home, you can no longer sign as an individual. Instead, you will have to sign your name as the trustee. Though this may seem inconsequential, it’s important to transfer all trust property correctly so you can get the most benefit from your revocable living trust.
Question 3. Will buying or selling a home through the living trust allow me asset protection benefits?
No. Your living trust will allow your property to avoid probate and allow you to keep your affairs private, but it won’t give you asset protection. If asset protection is important to you, you need to speak to your estate planning attorney about creating one or more types of an irrevocable trust.
If you’d like to know more about trusts and other estate planning tools, visit our seminars page for details about upcoming free seminars in the Colorado Springs and also Castle Rock area.