For many people, the most valuable asset they own is their house. If you own your residence or other real estate, you should carefully consider how to best manage and preserve it during your lifetime and beyond.
Many people hold real estate in their own names. However, it is also possible to put your real estate into a living trust that you create. You could be the trustee of this trust, or you could name a trusted person to be the trustee. You may also choose to have a corporate trustee, which is in the business of trust administration and can provide the benefit of its knowledge and experience. The benefits of a living trust are many and can include management of assets during your lifetime, as well as distribution of those assets to your loved ones after your death. Property held in trust does not have to go through probate court, which avoids time and expense, may provide tax benefits, and allows for your estate plan to remain out of the public eye.
If you had a trust and were to choose to put your real estate into your trust during your lifetime, you would need to change the title to show the trust as the new owner of the property. To do so, you would simply need an attorney to prepare a deed which you would sign, conveying ownership to the trust. The deed would need to be recorded in the Register of Deeds office for the county in which the real estate is located. If you intend to pass your real estate through your trust at your death but do not re-title the real estate to the trust during your lifetime, then a probate proceeding would still be necessary to transfer the real estate into your trust after your death.
When your trust includes real estate, the trustee typically manages the real estate for you. Management could include paying the property taxes and utilities, arranging and paying for insurance coverage, and paying expenses of maintenance, repairs, or remodeling from the trust assets. Additionally, many corporate trustees have procedures in place requiring them to get updated valuations periodically and to inspect the property regularly. This allows them to assess whether the property is retaining its value and to address structural concerns before they become bigger problems.
A key component of your estate plan is specifying the recipient(s), after your death, of real estate and other assets owned by your or your trust. The post-death conveyances of these assets will be handled by your fiduciary, i.e., your personal representative if the property passes under your will and is owned by you individually, or the trustee if the property passes through your trust and is owned by your trust. A personal representative’s or trustee’s deed may be used to convey ownership of the real estate to the recipient(s) you have named. Alternatively, your fiduciary may end up selling the real estate and distributing the net sales proceeds to or for the benefit of the named recipient or recipients.
Corporate personal representatives and corporate trustees who regularly handle real estate have experience and, typically, established policies and procedures for managing real estate settlement and administration. If the time came to sell the real estate, these corporate fiduciaries would handle any needed repairs or improvements which may increase the sale price, hire a realtor to market the property, and see the sale process through to closing, all with the assistance of a network of proven, reliable contractors, realtors, and title companies.
There are many options for managing your house or other real estate, both during your lifetime and after your death. Perhaps holding your real estate in a living trust would make sense for you. Perhaps a corporate personal representative or corporate trustee would alleviate some hassles or concerns. It is worth taking the time now to figure out the best option to preserve the benefits of your real estate for yourself, as well as for your loved ones down the road.
Let us know if we can help! If you have any questions about managing your house or other real estate, please contact Jean Durham, Legal Associate, at firstname.lastname@example.org.