Seniors!!! What is the biggest disadvantage of moving your house into a trust?
When completing your estate plan, transferring the ownership of your real estate to a trust gives you a lot of benefit when it comes to ease of transfer for your family. However, there are a few disadvantages you should consider.
Illinois has the second highest property taxes in the nation. If you are 65 or older there are two exemptions that you can apply for: the Senior Citizen Homestead Exemption and the Senior Citizen Assessment Freeze Exemption. With the Senior Citizen Homestead Exemption you can have your assessed value of your primary residence lowered (the amount may vary depending on the county) when you turn 65. Overall, this exemption will lower your property tax bill. The Senior Citizen Assessment Freeze Exemption, if approved by the tax assessor, will prevent the assessed value on your home from being increased in the future. This will prevent your property tax bill from drastically increasing in the future.
So, what happens if you are a senior and transfer the property ownership to your trust? The answer first depends on the type of trust. If it is a revocable trust for estate planning purposes it should have no effect. If it is an irrevocable trust for asset protection purposes, such as against a nursing home lien, it does make a difference. If you transfer your home to an irrevocable trust for asset protection purposes, the county where the property sits views it that you are no longer the owner and all your exemptions will be removed from your tax bill. Depending on your exemptions, this could almost double your tax bill. However, to every situation are pros and cons. You will have to consider if that negative effect outweighs the asset protection benefits the irrevocable trust provides in the event you have to go to a nursing home.
For the majority of my estate planning clients considering transferring ownership of their home to an irrevocable trust, they opt to lose the exemptions in exchange for the preservation of their home for their children’s benefit after their death. If you are considering an irrevocable trust for asset protections purposes or a revocable trust for estate planning purposes contact me and I can walk you through the process.
Read more at: https://laurenjacksonlaw.com/what-is-the-biggest-disadvantage-of-moving-your-house-into-a-trust/