What Is a Living Trust on a House?

A living trust is a legal document that allows a homeowner to place their house into a trust for their benefit during their lifetime and for designated beneficiaries after their passing. This estate planning tool can help streamline the transfer of property, avoid probate, and provide greater control over asset distribution.

A revocable or irrevocable living trust is created by a grantor (the homeowner) who transfers ownership of their house to the trust. The grantor can serve as the trustee, maintaining full control of the property during their lifetime. Upon the grantor’s death or incapacitation, a successor trustee manages or transfers the property according to the grantor’s wishes.

Under the provisions of estate planning law, a living trust can include bank accounts and real estate, ensuring minor children and other family members are financially protected. The trust distributes assets to named beneficiaries without delays from probate court.

Benefits of a Living Trust for a House

Avoiding Probate

One of the most significant advantages of placing a house in a living trust is the ability to bypass the probate process. Probate is a legal proceeding where a court validates a will and oversees the distribution of an estate’s assets. 

This process can take months or even years and may incur substantial court fees and legal expenses. If multiple heirs or complex financial affairs are involved or if the will is contested, probate can lead to prolonged disputes.

A living trust circumvents probate because the trust legally owns the house, not the individual. Upon the grantor’s death, the successor trustee named in the trust document can directly transfer the property to beneficiaries without the need for court involvement. 

Maintaining Privacy

Unlike a last will and testament, which becomes a public record upon probate, a living trust remains private. This means that the details of the estate, the beneficiaries, and the terms of asset distribution are shielded from public scrutiny.

Privacy is especially valuable for high-net-worth individuals, property owners who prefer to keep their estate plans confidential, or families who wish to avoid unnecessary disputes. Keeping real estate ownership and succession plans private also minimizes the likelihood of legal challenges from disgruntled heirs.

Incapacity Planning

A living trust is a proactive tool for incapacity planning. If the homeowner becomes mentally or physically incapacitated due to illness, injury, or aging, their successor trustee can step in and manage the property without requiring court intervention.

Without a living trust, if a property owner becomes incapacitated and has only a will in place, their family may have to petition the court for a conservatorship or guardianship to manage the estate. This court process can be cumbersome, expensive, and emotionally stressful for loved ones. A living trust eliminates this issue by designating a successor trustee in advance. 

Flexibility and Control

A revocable living trust offers a level of flexibility and control that a will does not. The grantor (creator of the trust) retains full authority over the trust and its assets during their lifetime. This means that if circumstances change—such as a decision to sell the home, add or remove beneficiaries, or restructure asset distributions—the trust can be amended or revoked entirely at any time.

For example, if a homeowner initially planned to leave their house to multiple children but later decides to assign it to only one child due to financial concerns or personal circumstances, they can easily update the trust document. A living trust can include instructions for how the property should be managed after the grantor’s passing. 

Potential Drawbacks of a Living Trust

• Initial Costs and Complexity: Setting up a living trust requires legal assistance and can involve upfront costs. However, these expenses may be outweighed by the savings from avoiding probate.
• Ongoing Management: Unlike a will, a living trust requires active management, including updating records and ensuring assets are properly titled.
• Not a Substitute for a Will: A living trust does not replace a will. A pour-over will is often necessary to transfer any assets not placed in the trust before death.

Common Misconceptions About Living Trusts

• Living Trusts Eliminate All Taxes: While a living trust helps avoid probate, it does not automatically eliminate estate taxes or property taxes. Proper tax planning is still necessary to save on estate taxes.
• Only the Wealthy Need a Living Trust: Many people assume living trusts are only for high-net-worth individuals. However, they can be beneficial for anyone seeking to avoid probate and maintain privacy in their estate planning.
• A Living Trust Protects Assets from Creditors: A revocable living trust does not provide creditor protection. Assets in the trust remain subject to claims from creditors during the grantor’s lifetime.

Living Trust vs. Will

• Probate Avoidance: A will must go through probate, whereas a living trust allows direct asset transfer, saving time and money.
• Privacy: A will becomes public record during probate, while a living trust remains private.
• Control During Incapacity: A will only takes effect after death, whereas a living trust allows for property management in case of incapacity.

A testamentary trust is created through a will and goes into effect after probate court proceedings. A living will is a legal agreement that outlines your healthcare wishes if you become incapacitated.

Steps Our Estate-Planning Attorneys Will Take to Set Up a Living Trust for Your House

At Morella Bencsics, our experienced estate planning attorneys guide homeowners in Pennsylvania through the process of setting up a living trust to safeguard their real estate assets. 

Initial Consultation and Estate Planning Assessment

The first step in setting up a living trust is an in-depth consultation with our estate planning attorneys. During this meeting, an attorney will:

• Evaluate your estate planning goals and determine if a revocable or irrevocable trust is the best option for your needs.
• Assess your property’s ownership structure, including joint ownership, mortgages, and title details.
• Discuss your beneficiaries and any instructions you have regarding the future use or management of the house.

If you own multiple properties or have a complex estate, we’ll help you decide whether a single trust is sufficient or if additional legal strategies are necessary.

Drafting the Living Trust Document

Once we understand your estate planning objectives, our attorneys will draft a customized living trust document that aligns with Pennsylvania law. This document includes:

• The Grantor (You): The person who creates the trust
• The Trustee: Manager of the trust and the property during your lifetime
• Successor Trustee: The person who will take over and manage or distribute the property after your passing or incapacity
• Beneficiaries: The individuals (or organizations) who will inherit the property
• Management Instructions: Terms regarding how the property should be maintained, used, or distributed

Our attorneys ensure that the trust is structured legally and strategically to protect your property while providing you with the flexibility you need.

Transferring Your House into the Trust

A vital step in finalizing your living trust is formally transferring ownership of your house into the trust. This involves:

• Preparing a new deed to reflect that the property is now owned by the trust instead of an individual
• Recording the deed with the appropriate county office to make the transfer official
• Reviewing mortgage agreements and insurance policies to ensure compliance with lender and insurer requirements

By correctly transferring ownership, we prevent accidental probate and ensure the property remains protected under the trust.

Ensuring Proper Funding of the Trust

In addition to your house, we may recommend placing other assets (such as financial accounts) into the trust to ensure a comprehensive estate plan. Our attorneys will:

• Review whether additional assets should be transferred into the trust
• Coordinate with financial institutions to re-title assets where appropriate
• Provide guidance on maintaining and updating the trust over time

Proper funding ensures that the trust functions effectively and that all designated assets avoid probate.

Drafting a “Pour-Over” Will

Even with a living trust, it’s prudent to have a pour-over will to capture any assets unintentionally left out of the trust. Our attorneys will:

• Create a will that transfers any remaining assets into the trust upon death
• Provide legal protection for any newly acquired assets that weren’t added to the trust during your lifetime

This ensures that all elements of your estate remain aligned with your estate-planning goals.

Providing Legal Guidance on Trust Management

A living trust is a dynamic legal tool, and it requires occasional updates as life circumstances change. Our team will:

• Advise you on modifications if your beneficiaries, trustees, or financial situation change
• Help you navigate incapacity planning, ensuring a smooth transition of control to the successor trustee if needed
• Provide ongoing legal support to keep your trust compliant with Pennsylvania estate laws

Educating You on Your Rights and Responsibilities

Once your trust is fully established, we ensure that you fully understand how it works. We will:

• Explain how to manage assets within the trust
• Clarify tax implications and potential estate tax considerations
• Offer strategies for maintaining flexibility within the trust structure

Secure Your Legacy with Our Pittsburgh Estate Planning Attorneys

Setting up a living trust for your house is a proactive step toward protecting your estate, avoiding probate, and ensuring a smooth transition for your beneficiaries. At Morella Bencsics, our dedicated estate planning lawyers in Pittsburgh offer personalized guidance and support every step of the way. To schedule your consultation, call us at (412) 960-1656 or contact us online.