Although nearly all property owners choose to protect their investment in the event of an unexpected catastrophe by purchasing insurance, many fail to consider protections from potential legal hazards. If you have a real property that you plan on leaving to a child or other heir, you should review your estate plan carefully. By placing your home or other property into a trust, you have the opportunity to avoid probate and speed the transfer of your assets to your heirs.
There are many types of commonly used real estate trusts. A Qualified Personal Residence Trust (QPRT) is an irrevocable instrument that is usually created for a fixed term. Once the term expires, the property placed into the trust passes on to the chosen beneficiaries. In order to alter a QPRT, a property owner must first obtain the consent of each of the trust’s beneficiaries. Once the term of the trust expires, the property owner is required to pay rent to the beneficiaries as long as he or she lives on or uses the property.
A significant benefit of using a QPRT trust instrument is that the taxable value of a property is set at the time the trust is created. With property values across the nation down, this type of trust may become increasingly attractive to many property owners. Additionally, if the current gift tax exemption of $5 million returns to $1 million at the end of 2012, a QPRT may be especially attractive to individuals who would like to pass on highly valued real estate.
A revocable or living trust offers more flexibility than a QPRT because it may be changed at any time without the consent of a named beneficiary. Such trust instruments may also be customized to fit the needs of any individual. Additionally, a revocable trust can help your heirs avoid going through the probate process in multiple states if you own property in more than one part of the nation.
Each individual’s situation is unique. For example, you may be best served by creating a revocable living trust for your home while another individual would be best served by a QPRT. Careful advance planning including the use of trusts may reduce or eliminate the need for your family to wait for the often lengthy probate process to conclude. An experienced trust attorney can help you evaluate your situation and create an estate plan that is right for you and your loved ones.
At Krause Donovan Estate Law Partners, LLC, our attorneys are available to help you plan your estate. They understand the questions and concerns you are likely to have when planning for the transfer of your assets following your death. Our attorneys have assisted clients with trusts, probate matters, health care documents, wills, powers of attorney, and a wide array of other estate planning tools. We invite you to request an estate planning consultation with one of our experienced attorneys to discuss your estate planning goals and how to achieve them.