estate planning attorney San Luis Obispo

“Should I put my new home in a trust?” is a frequent question posed to estate planning attorneys, and there’s more than one answer depending on whether the home is your residence or a rental property. The estate planning attorneys at San Luis Obispo’s Toews Law Group, Inc. recently released a report summarizing the options that are available for new homeowners to protect their property.

For first time homeowners, the answer is almost always, “Yes.” A primary residence located in California should be owned by your living trust. However, for other properties, such as investment properties, vacation homes, and properties in a different state, the answer may be more complicated.

Rather than asking “Should I put my home in a trust?” new homeowners would be better served asking “Should I own the home in a trust or an LLC?” The answer to that question usually depends on whether the property is used as primary residence, rental property or vacation home.

Should I put my residence in trust? – YES.

A trust is one way to protect real estate from probate, simplify management of the home if you become incapacitated and smooth the transfer of the property to your beneficiaries. In most circumstances, your primary residence should be owned in your revocable living trust (also known as a family trust). However, certain circumstances may create the need to own your primary residence in an irrevocable trust – such as Qualified Personal Residence Trust. The most appropriate form of ownership for your primary residence can be determined with the assistance of a skilled estate planning attorney.

How should I own my investment or rental property?

  • A trust may be an effective manner in which to own investment or rental property. But a revocable trust does not protect the property owners from liability which may arise on their rental or investment properties. In order to obtain liability protection, property owners typically form an LLC.
  • An LLC, or limited liability company, is an entity, independent and separate from you as an individual or your Trust, which owns your property. Forming an LLC, and titling your property in the company can provide liability protection so long as you comply with certain formalities. For example, you will need to ensure that you do not commingle LLC assets with your personal assets and you should ensure that all income and expenses are received or transmitted in the name of the LLC.

Even if your investment property is owned by an LLC, you still need to create a revocable living Trust which will own the membership interest in the company. Property titled in the name of an LLC which is not owned by a trust may be subject to probate!

It’s important that the trust be properly established and that all assets, including real estate, be appropriately transferred and funded to the trust. A trust is one piece of an estate plan that helps:

  • Avoid a prolonged, unnecessary, and expensive probate;
  • Confirm those you trust most are named to manage your health and financial affairs if you are incapacitated; and
  • Name the beneficiaries who will receive your assets upon your death.

The attorneys specializing in estate planning in San Luis Obispo, can assist you with addressing the issues of how to own title to your personal residence, your investment property, or your rental property. The attorneys at Toews Law Group can also provide advice regarding other estate plan matters including:

  • The appropriate Powers of Attorney for the management of finances and your health care needs;
  • A detailed review of your assets to make sure your plan covers all of your personal and real property, not just those that would be placed in a trust;
  • An assessment of the beneficiary designations on IRAs and 401(k) accounts, insurance policies, annuities, pay-on-death accounts and joint tenancy assets so that all of your assets, regardless of how held, pass to your beneficiaries in a coordinated and cost-effective manner.

Toews Law Group, Inc. provides assistance and detailed instruction in the transferring and retitling of assets as well as preparation of deeds and assignments to your trust to make sure title to all assets is properly held in your trust.

This information has been prepared by Toews Law Group, Inc. for informational purposes only and is not legal advice. The transmission of this information is not intended to create an attorney-client relationship. Contacting us does not create an attorney-client relationship. Consult an attorney for advice regarding your individual situation.