Why Every Piece of Real Estate Should Be Vested In a Living Trust

Avoid Probate Court and High Capital Gains Taxes

Are living trusts just to confusing, complex and expensive to use in a real estate transaction?

The answers are no, no and definitely no. So what are the benefits of a living trust?

1. Lower Tax Treatment

Every person already has a $250,000 capital gains exemption, if you are married, a total of $500,000 on an owner occupied home, but if your gains are going to be higher than that or the property in question is not your primary residence, then the you will definitely need a trust to protect.

“Stepped up Basis.” Trusts are a community property instrument that resets the value of the home on the death of its owner (trustor) called “stepped up basis.” Simply said, it wipes out capital gains taxes on homes by raising their cost basis to market value. For example, if the home was purchased for $50,000 and is now worth $450,000 upon the trustor’s death, the cost basis is raised from $50,000 to $450,000 eliminating all capital gains taxes on the sale.

2. You can avoid having to go to probate court if you have a trust:

If you die without a trust, the property has to be sold in a probate court which takes time and money. A trust transfer the title automatically to the beneficiary. All you need is the death certificate to transfer title.

3. Trusts are as low as $125.

4. All you need is a trustor (person who setting up trust, if married a co-trustor) and beneficiaries, the parties who will receive the property after death (children).

You also need an executor (usually one of the children) who will administer the estate after death.

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