When most people think about estate planning, they think about having a will. But if you own a home in Tennessee, there is another piece of the conversation that may be worth exploring: a trust.
When someone passes away, their estate may need to go through probate—the court-supervised process used to settle debts and distribute assets to heirs or beneficiaries.
On paper, that may sound fairly straightforward. In real life, it can be a lot for a family to handle.
There may be court filings, attorney fees, paperwork, deadlines, property maintenance and decisions about what to do with the family home—all while everyone is already dealing with the loss of someone they love.
And from my real estate perspective, the house is often one of the biggest pieces of the puzzle.
Whether it is a longtime family home, an investment property, acreage or a second home, real estate is often one of the estate's most valuable assets. Planning ahead may make the eventual transfer of that property much easier for the people you leave behind.
How Can a Trust Help Avoid Probate?
A revocable living trust is a common estate-planning tool that may allow certain assets to transfer outside of probate.
Instead of personally owning an asset, such as your home, ownership can be transferred into the trust. You still maintain control of the property during your lifetime, but after your death, the successor trustee can manage or distribute the property according to the instructions in the trust.
For families, that can potentially mean a more private and streamlined transition without having to take that particular asset through the traditional probate process.
One important distinction: having a will does not necessarily mean your estate avoids probate.
A will provides instructions for what you want to happen, but it may still need to be submitted to probate court. Properly titled assets held in a trust can generally pass according to the terms of the trust without going through probate.
What Can You Put Into a Trust?
Depending on your circumstances and the advice of your estate-planning attorney, a trust may hold assets such as:
- Your primary residence
- Rental or investment properties
- Vacation or second homes
- Bank accounts and certain investments
- Business interests
- Valuable personal property
You don't necessarily have to put everything you own into a trust. The important part is creating a plan that makes sense for your property, your finances and your family.
And here's something homeowners sometimes overlook simply creating the trust isn't enough. Assets that are intended to be owned by the trust generally need to be properly transferred or titled into it.
That can be especially important with real estate.
Revocable vs. Irrevocable Trusts
Most homeowners exploring this option will hear about two general types of trusts: revocable and irrevocable.
A revocable living trust generally allows you to remain in control. You may be able to change the trust, add assets, remove assets or dissolve it during your lifetime.
An irrevocable trust is much less flexible. Once assets are transferred into it, changing the arrangement can be significantly more difficult. These trusts may be used for specific estate-planning, tax or asset-protection goals.
This is where an experienced Tennessee estate-planning attorney becomes important. There isn't a one-size-fits-all answer.
The Real Estate Piece Matters More Than You May Think
After years of helping Knoxville-area homeowners sell their homes, I have seen how different a traditional sale can be from selling a property after someone has passed away.
With an estate property, questions can quickly come up:
Who actually has the authority to sell the house?
Does the property have to go through probate?
Who signs the listing agreement and sales contract?
Are there multiple heirs involved?
What happens if the house needs repairs or a major cleanout?
Should the family make improvements or sell the property as-is?
How do we determine what the home is actually worth in today's Knoxville real estate market?
These aren't questions most families deal with every day—but they are situations I regularly help navigate from the real estate side of the transaction.
Good planning before it is needed can potentially make many of those decisions much easier.
Why Planning Ahead Matters
No one particularly enjoys talking about what happens to their property after they are gone. But if you own a home, especially one with substantial equity, having a plan can be one of the best things you do for your family.
Life also changes.
You may buy another home, sell an investment property, welcome grandchildren, get married or divorced, downsize, or experience major changes in your finances. An estate plan created years ago may no longer reflect what you own today or what you want to happen in the future.
That is why it is worth reviewing your estate plan periodically with the appropriate legal and financial professionals.
Own Real Estate in Knoxville? Start With a Plan.
If your goal is to make things easier for your family, talk with a qualified Tennessee estate-planning attorney about whether a trust makes sense for your situation.
And when real estate is part of an estate, having the right professionals involved can make a tremendous difference.
I am not an attorney and cannot provide legal advice, but I can help with the real estate side of probate and estate property sales throughout Knoxville and East Tennessee.
Whether your family needs to determine a property's current market value, decide what improvements are worth making, coordinate a cleanout, prepare an inherited home for the market or sell a property as-is, I can help you understand your options and create a plan that protects the value of the real estate.
Sometimes the best gift you can leave your family isn't just the house.
It's making the next steps a little easier for them.
Angie Cody | LPT Realty
My Expertise, Your Profit.
