Transferring Your Family Home to a Trust

If you have only heard about trusts as a plot point in movies and TV shows, then you probably think that only rich people can set up trusts and that their only function is to dispense cash to overgrown nepo babies. By this logic, you probably assume that, when a trust owns a real estate property, it is a multimillion-dollar mansion, inhabited only by the spoiled pet dog of the deceased grantor and the dog’s staff of full-time caregivers. Once you get past the basics of your estate plan, you will find out that you do not have to be wealthy to benefit from establishing a trust and transferring property to it. In fact, if you own a house but your financial situation is so precarious that you will probably need to apply for Medicaid if you need nursing home care, then transferring ownership of your house to an irrevocable trust may be the best way to ensure that your descendants can inherit it instead of the probate court selling your house and paying the proceeds to Medicaid. To find out more about how a trust can protect your heirs’ inheritance even if you are of modest means, contact a Dade City estate planning lawyer.

Generational Wealth for the 99 Percent?

Medicaid will pay for nursing home care for anyone who needs it and has no other way to pay for it. Medicare’s residential care benefits are meager  and most seniors exhaust them quickly and end up paying for nursing home care out of pocket, unless they have long-term care insurance. Medicaid nursing home care benefits are not a freebie, though. Medicaid redirects your Social Security check to itself and uses it to pay for your nursing home stay, but it does not cover the full amount. Therefore, when a Medicaid nursing home beneficiary dies, Medicaid seeks payment of the remaining balance of the nursing home bill from the decedent’s estate.

A trust is not part of your estate; it is a non-probate asset, because it is legally separate from the grantor. Therefore, if you establish a trust and transfer your house to it, Medicaid cannot force the probate court to sell your house and use the proceeds to pay the nursing home bill, because the house will not be part of your estate. This means that your surviving family members can inherit the house.

How to Transfer Your House to a Trust

The first step is to establish a trust by drafting and signing a trust instrument, which designates trustees and beneficiaries of the trust, as well as instructions for managing it. The next step is to sign a transfer of deed document, specifying that you are transferring the house to the trust; after this, the trust is the legal owner of the house. If you still owe a mortgage on the house, you should notify the mortgage lender of the transfer.

Contact a Florida Estate Planning Attorney About Estate Planning for Cash-Strapped Homeowners

An estate planning attorney can help you establish a trust to protect your family home from creditor claims during probate.  Contact The Law Office of Laurie R. Chane in Dade City, Florida to discuss your case.

Source

cnb.com/private-banking/insights/transfer-property-into-a-trust.html