It is clear to estate planning attorneys that the most valuable asset for many local residents is their homes. First of all, there is no way to put a price on the emotional, historical, and personal value of your home. From house shopping to paying the mortgage every month to having a safe place to live during your retirement, no dollar amount can be added up on a calculator. That said, in these time of uncertainty, it's more critical than ever to make sure the most valuable asset you own stays protected.
A powerful tool that is commonly used for this purpose is the revocable trust. This is created while you are still living and allows you to make changes. The revocable trust gives you and your home a number of protections during your lifetime but also creates provisions for when you pass away. For example, if you have created a revocable trust, once you die, it becomes unchangeable ("irrevocable"), ensuring that your wishes are carried out. Also significant is the fact that it keeps your house out of the probate process, saving money and the risk of the courts choosing to do something other than you would have liked.
Revocable trusts are relatively easy to set up. The cost varies, of course, but putting together all of the legal documentation usually costs less than a few thousand dollars and saves many times that much for the estate. They are also very flexible, which means that you can have a lot of say in what becomes of the home you've treasured.
For example, you may wish to leave the property directly to a certain heir or group of heirs who will then be responsible for the costs associated with keeping and running the home. On the other hand, you may choose to incorporate funding for the upkeep of the home. Some people even choose to leave their home as a legacy to a certain organization for various purposes or to a group of family members to use as a vacation residence.
Another option is when a specific person is given the option to buy the home. If this person declines, then the next potential family member is given the option. The grantor can name as many people as he or she likes or can choose to have the home sold and the proceeds given to the charity of his or her choice. When a family member exercises this option, however, it is typical for the home to be purchased at fair market value.
A good estate attorney will be able to help you create a revocable trust that gives you access to your home throughout your lifetime while setting up what will happen to it after your death. By doing so, you may be able to avoid certain taxes that would apply, not to mention avoiding the significant costs associated with probate.