🏡 You Have a Will… But Is Your Home Really Protected?

Many homeowners assume that having a will means their family will avoid probate. Unfortunately, that isn't necessarily the case.

A will only takes effect after you pass away, and assets subject to probate may still have to go through the court process before being transferred to your beneficiaries. Probate can take time, cost money, and become part of the public record.

A revocable living trust can help certain assets avoid probate — but there's an important catch: the trust must be properly funded.

Simply creating a trust and putting the documents in a binder isn't enough. If your home is intended to be part of the trust, for example, the title generally needs to be set up correctly. Other assets may need to be retitled or have appropriate beneficiary designations.

Another misconception is that a living trust automatically saves you taxes. A typical revocable living trust is not a tax shelter and generally doesn't eliminate income, capital gains, or estate taxes during your lifetime. Its primary benefits are planning, control, and making the transfer of assets easier for your family.

Real estate owners should also understand the potential step-up in tax basis when property is inherited. Depending on the circumstances and tax laws at the time, this can significantly affect the capital gains taxes heirs may owe if they later sell the property.

Most importantly, don't create a trust and forget about it. Buying or refinancing property, opening new accounts, marriage, divorce, or other major life changes may mean your estate plan needs to be reviewed.

As a Realtor, I see how important the way a property is titled can become when a family eventually needs to sell or transfer a home. A little planning today can potentially save your family considerable time, expense, and stress later.

This is general information only and not legal or tax advice. Always consult a qualified estate-planning attorney and tax professional about your individual situation.