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Home Owner Information Part 5

Living Trusts

Living Trusts are a viable option when trying to decide how to hold the title of a property. When a property is held in a Living Trust, title companies have certain requirements in order to initiate the transaction. It is a good idea to consult your lawyer when contemplating how to hold the title of a property, but if you want some general information you can also ask the title company to provide you with the relevant information.

What is a Living Trust?

The Living Trust is typically a family trust where spouses (husband or wife) are the trustees and their children are the beneficiaries. Those creating the trust and transferring their property are knows as Trustors or Settlors and they are generally the primary beneficiaries during their lifetime. The Living Trust usually terminates after both Trustors pass away and the Trust is then distributed to the children who have become the primary beneficiaries upon losing their parents. This is usually done as opposed to dividing the property in a will.

Reasons for Holding Property in Living Trust

When considering holding the title of your property in a Living Trust, it is a good idea to consult your account and your lawyer for more information. However, here are a few common reasons for holding property in a Living Trust for you to consider:

• Avoids lengthy probate
• Shelters the property from certain unsecured creditors
• Minimizes or postpones death taxes
• Allows married persons to exempt a significant part of their assets from taxation and may postpone taxes after one spouse passes
• Authorizes the trustee to borrow against the property as permitted by the terms of the Trust (but not all lenders will lend on a property held in Trust)