Why you should place your home in a Trust.
If you are a homeowner in your 50’s or older, you should transfer your home into an Asset Protection Trust. Having you name on the deed (title) of the home exposes you to risk of lawsuits, creditors like Medicaid and of course your heirs will have to deal with the costly and lengthy probate process after your death. If however, you place your home into an Irrevocable Asset Protection Trust, you are protecting your home and ensuring an easy and quick transition of the property to your children after your passing.
When your name appears on a deed to a home, the property belongs to you. If you are involved in an accident while driving and are sued for damages sustained by the claimant, all of your property—including your home—can be used to satisfy the claim. Homeowner’s insurance is the first line of defense but often is not enough to cover the damages awarded the claimant. Likewise, if you are fifty five (55) or older, and are receiving Medicaid or will receive Medicaid at some point during your life, the Human Resources Administration (the New York City agency responsible for administering the Medicaid program), must attempt to recover against your home either after your death or if you are in a permanent Nursing Home facility.
When transferring your home to a Trust, a new deed must be effectuated thereby removing you as the homeowner. The new owner is the Trust itself. Typically, you would appoint a trusted child or close family member as the Trustee to administer the Trust. In the event you need the home sold to purchase another residence or otherwise invest the sales proceeds from the sale of the home, the Trustee would sign the contract of sale. Because you are no longer the homeowner and because the Trust is irrevocable, the home cannot be subject to a lawsuit or Medicaid recovery but yet you still retain the full right to live in the home and, maintain any tax property breaks such as STAR (only if the transfer to Trust is done properly).
Finally, if your home is transferred to a Trust, your children (or other heirs) will inherit the home automatically. When you die, the Trust terminates and title passes immediately to the beneficiaries you appoint in the Trust. In the alternative, if the home is in your name upon your passing, the heirs will have to pay for probate (the necessary and lengthy court process of proving the authenticity of your Will) or administration (the necessary and lengthy court process of proving your nearest living relative’s relationship to you if you died without a Will).
As we see, placing your home in a Trust has many advantages. Simply put, having your name appear on a deed to real property is not a good form of ownership. This article is but a brief and simplified discussion of Trust benefits. Call our office today to schedule a consultation and achieve your peace of mind: 347-699- 5529.