The popularity of home improvement projects has encouraged retailers to give us a wide array of choices to customize and improve our homes. We can turn an ordinary house into a dream home—with a significant investment of time, money, and effort. Especially after the COVID pandemic, many of us have placed a priority on creating a home environment that gives us joy.
Unfortunately, that dream home is at risk. Aging and other aspects of life can work against us in surprising ways, creating financial liability that can take your home away from you or prevent you from passing it along to your family. However, with careful planning, you can protect your home by putting it in a trust. Different types of trusts can protect your home in a variety of ways. We can describe a couple of options here, but it is best to have an estate planning attorney review your specific needs to recommend the best trust to protect your home.
Most people who set up revocable living trusts use this tool as a way to enable their home and other assets to pass to loved ones without the expense and delays of probate. However, it can also protect the home in certain situations.
For instance, if you become incapacitated and unable to make payments or keep up with repairs, the alternate trustee named in your trust document can take over those tasks. This will keep the house in good shape and prevent foreclosure or other actions that could threaten the house.
However, a revocable trust will not protect the home from creditors. If you are at risk of judgment due to your business interests or if you may be interested in applying for long-term care benefits through Medicaid, you will need a different type of trust to protect your home.
As the name suggests, an irrevocable trust cannot be “undone” once it is created, and once you put property into the trust, you cannot take it out again. This makes an irrevocable trust much less flexible, but also stronger and more protective.
If you put your home into an irrevocable trust, it is owned by the trust rather than you. That means that creditors cannot access it to pay a judgment. If you obtain Medicaid benefits to pay for nursing home care, the government cannot require your family to sell the house to pay back the amounts paid to the nursing home. Your home will be protected for future generations.
Get the Right Trust to Protect Your Family
Your situation is different from everyone else’s. That means the asset protection strategy that worked for your neighbors or colleagues might not be the right choice for you. It is important to review the details of your situation and your needs and goals with an experienced asset protection attorney to learn your options and make an informed decision about the tools to protect your assets for use in your lifetime and for your family’s future.
At Huizenga Law, we are always ready to help. Schedule a planning session today.