Home Buying in Chandler>Question Details

J, Home Buyer in Chandler, AZ

Why would I title a home I buy in a trust or not in my name?

Asked by J, Chandler, AZ Mon May 6, 2013

What are the advantages?

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J,

As you've read, this is outside the scope of Realtors and discussing with an attorney/tax advisor/lender/escrow agent is recommended. With that said, here are some possible considerations you may want to explore with your legal/tax/lender/escrow professionals:

1) If you are getting a loan when you purchase, most banks will not allow you to purchase in a trust as they require a person (not an entity) to hold responsible for the loan. Some folks who desire to put their home in a trust will file a quit claim deed after closing to transfer Title to their Trust.

2) If your home is in a Trust, it may provide a faster way to transfer rights of ownership where you decide who gets your ownership rights. Possibly avoiding probate and any laws which would default dictate who would get the rights upon your death.

3) If your home is in a trust, it may provide some protection if you are sued personally.

I hope you find this helpful.
0 votes Thank Flag Link Mon May 6, 2013
People buy real estate in the name of a trust for asset protection. If you got sued, the lawyers looking for what assets you posses would not see the properties held in the name of your trust. The trust is as simple as a piece of paper sitting in someone's desk and does not have to be registered with the state. Hope this helps. There are several different types of trusts, so to others points it would be good to talk with a lawyer to ensure things are done right. But generally when done for name sake, the reason is as I have written.
0 votes Thank Flag Link Fri Apr 17, 2015
Just a note on Patty's response. If you buy real estate in an individual's name and obtain a mortgage on the property in the individual's name and then transfer (by quit claim deed or other transfer) you will trigger the due on sale clause in the mortgage. What this means is without the lender's prior approval if you transfer a property out of the owner's name in to another's name the bank can call the mortgage as they look at this as a sale of the property and the mortgage is not assumable.
0 votes Thank Flag Link Tue Jun 4, 2013
First, a trust is a separate legal entity by itself. Therefore the trust can acquire and dispose assets at the will of the trustee as long as the transfers are in the best interest of the beneficiaries. There are lots of trusts. An IRA is a trust and the only trust that FNMA & FHLMC will allow to obtain a conventional mortgage outside of individuals.

Assets in a trust are shielded by legal liability. If you as an individual have tax issues, legal issues, spousal issues, the trust keeps these issues at arms length (as long as the beneficiary has no control of the trust).

Here is an example: A husband and wife have a disabled child, the child will never be able to fend for themself. Parents create a trust with the child as the beneficiary. The parents transfer assets to the trust (including real estate) to provide for the disabled child when the parents die or are incapacited. A trustee may be another family member, a clergyman a lawyer for example.

For a regular individual to put a home in trust that they plan to live in will achieve the following:

limited liability exposure of the real estate from actions of the beneficiary
the property will not be held up in probate as it won't be part of the beneficiary's estate
the trustee can pass the property either within the trust or outside of the trust to individuals and/or entities.

For investors you can buy real estate in an IRA. You can sell at gains and the tax will be deferred. Wealth accumulation tax deferred is the main goal here.

Of course, for your specific needs seek out the counsel of an estate/trust attorney.
0 votes Thank Flag Link Mon Jun 3, 2013
I am also not an attorney, but it is my belief that a trust will not limit any liability. I have had the pleasure of helping families after a loved one has passed. A trust will eliminate the need for your relatives to go through probate in order to sell your home. If you purchase the home with cash, you can select to have it go directly into your trust. Otherwise, you will have to transfer the deed into the trust and title companies don't like to take on the liability because there is a potential that you could void your title insurance and/or your lender doesn't allow the transfer plus there is a cost. When deciding to do this, it is in your best interest to talk to an attorney for advice.
0 votes Thank Flag Link Mon Jun 3, 2013
Best to talk to your attorney.
Trust may provide legal and tax advantages. Mostly it provides estate planning advantages.
You can always transfer property into a trust after taking in your name.
Best of luck,
Brad
0 votes Thank Flag Link Tue May 7, 2013
J

The answer lies in tax, legal, estate area's etc that are not in the scope of our real estate licenses. We know and understand the real estate component, trusts are not real estate. Trusts may sometimes be used in the course of real estate but are not central to the process. Our expertise lies in the property, location, values, contracts etc., areas that I would guess most trust attorneys and tax consultants wouldn't claim to be experts in either.

Please, I'm actually trying to help you! I really don't think this is the best forum for you to find this answer. I suspect other sites may exist that are targeted towards legal and or tax advice that might answer this question better for you.

Thanks for the question and the answers!
0 votes Thank Flag Link Mon May 6, 2013
Can anyone dare to provide an answer that isn't couched in trepidation? I am not going to sue anyone and I don't look for advice in Internet forums.

Just lay some truth on me: I can handle it.

Why do some people keep houses out of their names and put them in a trust while living in them?
0 votes Thank Flag Link Mon May 6, 2013
You should contact your attorney about this so that they can give you sound legal advice based on what your situation is.
0 votes Thank Flag Link Mon May 6, 2013
Hi J,

You should contact an Attorney for this. However, that said, if your property is in a Trust when you die, it will not have to go through Probate. (That is one advantage).

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Mon May 6, 2013
Hi Doug:

Live in
Cash
No

Just why do people do it?
0 votes Thank Flag Link Mon May 6, 2013
J

This is a legal question and one best answered by an attorney that practices in this area.

Are you buying a home to live in or an investment?

Will you be looking to finance or pay cash for this one?

Do you have a trust now?
0 votes Thank Flag Link Mon May 6, 2013
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