Benefits of Placing Your Home In A Family Trust in Arizona

In Arizona, you can gain numerous benefits by placing your home in a trust. Doing so ensures that your house avoids probate and receives tax and other benefits. The following explains more about the how and why behind placing your home in a trust as part of your estate planning.

What Are the Advantages of Putting Your Home in a Trust?

Understanding the benefits of putting a house in a trust can help simplify the transfer of your assets, keep your finances confidential, and save money for your heirs.

Different types of trusts exist, and because the trust documents are legally binding, you may want to seek professional help in setting up your trust. Once you complete the process, you can receive the following benefits.

Avoid Probate

Your family may need to pay thousands of dollars in legal costs and wait up to a year before receiving anything from your estate if it goes through probate. A trust avoids probate by transferring ownership of your assets directly, without the need to spend time and money in court.

A trust can also help keep the property in the family for generations without requiring changes to the names on the home’s title each time it changes hands to a new family member.

Asset Protection

Once assets transfer into certain trusts, you can protect them from creditors and legal action. The protection extends to the assets’ beneficiaries as long as the trust remains the owner of the assets. For this protection, you must use an irrevocable trust and transfer ownership of your home from your name to that of the trust. Since the trust, not you, legally owns the house, creditors and attorneys cannot access the real estate asset.

Cut Down Estate Taxes

When you place your home into a trust, you remove its value from your estate, which means your taxable estate becomes smaller. Your estate will only owe taxes on the remaining assets outside your trust.

Keep Your Financial Affairs Private

When you set up a trust and transfer your property, it will not be subject to probate. Legal documents from the probate process become public information, so the details of your trust remain private, which allows you to keep your financial affairs confidential.

Ease Trustee Stress and Responsibilities

One final advantage of placing your house in a trust is that it reduces the burden on trustees, as it provides clear instructions for asset management and distribution. This structure can minimize disputes and streamline decision-making. It also grants trustees the legal authority to act without prolonged court involvement, which makes the trust administration process smoother and less stressful for all parties involved. 

What Are the Disadvantages of Putting Your Home in a Trust?

While placing your home in a trust offers many benefits, you’ll also want to consider the potential drawbacks before moving forward. For example, trusts can add expense, complexity, and restrictions that may not suit your unique situation as a homeowner.

Consider the following disadvantages and consult an attorney as you weigh your options:

• Upfront costs – Working with an attorney to set up a trust is wise to ensure it complies with Arizona law. Be prepared for attorney’s fees, recording fees, and any costs associated with retitling your home in the trust’s name.
• Ongoing management – Trusts require active management. If you move, refinance your home, or acquire additional property, you must update the trust documents accordingly. Failing to keep the trust current may result in unintended consequences, such as property being excluded from the trust.
• Loss of direct control (with irrevocable trusts) – If you use an irrevocable trust, you transfer ownership of the home to the trust permanently. This limits your ability to sell or refinance your home and means you’ll need a trustee or court approval to make changes to the trust.
• Administrative complexity – Trusts can be more complicated than wills, requiring careful record-keeping and additional paperwork. For some families, this complexity may outweigh the benefits.

How to Put Your Home in A Trust

Establishing a trust requires you to create and sign a trust agreement with you, an attorney, or a loved one as trustee. You can dictate the terms of the trust, and a new deed to the house must be signed, designating the trustee as the home’s owner. The deed gets recorded at the County Recorder’s office, and the trust legally owns the house.

Talk to an Arizona Trust Attorney for Help With Your Estate Plan 

You have a variety of legal tools to consider when planning your estate. An experienced Arizona trust attorney at Pennington Law, PLLC, can review your situation and advise on an approach tailored to meet your unique needs. Whether you’re looking to minimize your estate tax burden or protect your family’s privacy, let’s discuss your circumstances and go through the process together. Contact us today for a free consultation.