Legacy Assurance Plan: Choosing the Proper Form of Estate Planning for Your Home

Summary: For a lot of people, their home is their most important asset, both in terms of dollar value and emotional value. There are lots of different ways to structure your overall estate plan, and that is true regarding how you handle your home, too. Some methods may, depending on your circumstances, be more advantageous than others. Planning for your home can create traps for you if you’re not careful. Choose a disadvantageous plan and you could create major headaches for you or your loved ones. A proper plan, such as one with a revocable living trust, may allow you or your loved ones to maintain control and flexibility while also escaping unnecessary costs, procedural burdens and stress.

Avoiding probate may a very important goal within the process of planning for the transfer of your home. Probate can potentially be complicated, stressful, time-consuming and expensive. There may be many documents that have to be filed with the court and multiple hearings to attend. There is also the requirement that the house be professionally assessed to determine its exact value.

In a recent article, a representative of Fidelity Investments told the New York Times that, when “assets are left through a will, about 5 to 15 percent of the total value of the estate goes to pay probate and legal fees.” These figures do not even factor in the cost to whomever you’ve named as the personal representative of your estate. As one New York City estate planning attorney told the Times in that same recent article, “People take days off from work to head to probate, which costs time and money. Who likes spending their vacation days in probate?”

One way around this problem is the use of trust planning. If your needs and goals center primarily upon avoiding probate, then a revocable living trust may be a place to start. With a properly executed living trust that is properly funded, your estate won’t need to go through probate when you die. Not only will you avoid the possible costs and delays of probate, you’ll also avoid the other procedural costs, hurdles and headaches, such as a probate-mandated valuation assessment of your home. If you have a living trust and your home funded into it, you can still sell it, give it away, rent it out or do anything you would otherwise do to your home if it was in your own name. You’ll have all of the control, freedom and flexibility as if you owned the home in your own individual name, but your home will be protected in terms of avoiding probate.

If, however, your goals also involve other needs (such as Medicaid planning, for example) there may be different or additional estate planning tools available to help. Certain types of irrevocable trusts may allow you to reduce the size of your “countable” estate and increase your potential for qualifying for benefits. Transferring property into an irrevocable trust should be done carefully and after detailed consultation with an experienced estate planning attorney. As the name implies, these trusts are irrevocable, so you can’t change your mind later. Additionally, if your concern is Medicaid planning, it is important to note that certain assets may be exempt from your “countable” estate and may not need to be placed in a trust to enhance your overall Medicaid planning goals.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.