Pros and Cons of Putting Your House in a Trust

Your home can be one of the most valuable assets you own. Therefore, deciding what happens to it after you’re gone is a critical decision when estate planning. For many, placing their house in a trust is a smarter, more controlled alternative to a simple will. It carries valuable benefits that can save heirs significant time, money and legal headaches. However, like any estate planning strategy, it comes with trade-offs worth understanding before you commit.

Ask a financial advisor for help creating the right estate plan for your family’s needs.

Benefits of Putting Your House in a Trust

Before jumping into putting your house into a trust, it’s important to know the benefits. Here are the three biggest benefits that are important to know:

1. Direct Transfer

One major advantage of placing your home in a trust is the direct transfer to your beneficiaries upon your death ¹ . It skips the probate process, which can be lengthy, expensive and a matter of public record. Therefore, bypassing it entirely can save your loved ones considerable time, money and stress during an already difficult period.

2. Lifetime Trustee

With a revocable living trust, the most common type for this purpose, you remain the trustee of your own property ² . That means you can continue to live in, manage, sell or refinance your home. The trust only activates meaningfully upon your incapacity or death. This means your day-to-day relationship with your home changes very little.

3. Successor Trustee

A trust allows you to name a successor trustee who will manage your property if you become unable to do so yourself due to illness or injury ³ . Without this structure in place, a court may need to appoint a conservator to manage your affairs. This is a process that can be slow, costly and outside of your control.

Potential Drawbacks of Putting Your House in a Trust

Nothing is perfect, so it’s important to understand any potential drawbacks before moving forward. Here are the ones to pay attention to:

Cost

It is not free to set up a trust. The legal fees for drafting and executing a trust document can range from several hundred to several thousand dollars ⁴ . It all depends on the complexity of your estate and your attorney’s fees. For homeowners with relatively modest estates, the cost of a trust may not be worth it when simpler alternatives are available. An example is a transfer-on-death deed.

May Require Updating

A trust is not a set-it-and-forget-it solution. If you refinance your home, significantly change your estate plan or acquire additional property, your trust may need updating. This can mean additional legal fees over time.

Due-On-Sale Clause

When you place your home in a trust, you are technically transferring the title to the property. This can trigger a due-on-sale clause in some mortgage agreements, allowing the lender to demand full repayment ⁵ . Lenders rarely enforce this clause for revocable living trusts. However, it is still worth notifying your mortgage servicer to confirm their policy before making the transfer.

No Creditor Protection

A common misconception is that placing your home in a revocable living trust protects it from creditors or legal judgments. Because you retain control of a revocable trust’s assets during your lifetime, they are still considered part of your estate. Therefore, they still remain accessible to creditors. This means a trust offers no meaningful asset protection in most circumstances ⁶ .

When to Put Your House in a Trust

Homeowners with real estate in multiple states have a particularly strong case for using a trust. Otherwise, each state would require its own separate probate proceeding upon your death. Consolidating those properties under a single trust eliminates that complexity. It can also significantly reduce the legal expenses your estate would otherwise face.

A trust becomes especially valuable if you are concerned about your home and affairs in the event of serious illness or incapacitation. Naming a trusted successor trustee ensures that you choose the party to manage your property on your behalf - not a court-appointed stranger.

If you prefer to keep your estate private, a trust offers a level of confidentiality that a will lacks ⁷ . This can be particularly meaningful for individuals with significant assets, blended families or other circumstances requiring discretion.

How to Put Your House in a Trust

First, you must determine whether a revocable or irrevocable trust best suits your goals. The two differ significantly in terms of control, tax treatment and asset protection. A revocable living trust is the most common choice for homeowners who want to avoid probate and simplify estate transfers.

While you can create a trust online, a trust can have real legal consequences if done incorrectly. Therefore, working with a qualified estate planning attorney is strongly advisable. An attorney can draft a trust document tailored to your specific circumstances. They will help ensure your trust complies with state laws and avoid common mistakes that could undermine the trust’s effectiveness.

Creating a trust document alone is not enough. You must also formally transfer ownership of your home into the trust. This is done by executing a new deed that names the trust as the owner of the property. This deed then needs to be recorded with the appropriate county or municipal office in order to be legally valid. Failing to complete this step means your home would still be subject to probate despite the trust.

Bottom Line

Placing your home in a trust can be a powerful estate planning move. It offers benefits that range from avoiding probate and protecting your privacy to ensuring a smooth transfer of property. That said, it is not the right choice for every homeowner. The upfront costs, ongoing maintenance and potential complications with your mortgage or property tax exemptions deserve careful consideration before proceeding.

Tips for Estate Planning

• A financial advisor can help prepare your entire financial profile for your individual long-term estate planning needs. Finding a financial advisor doesn’t have to be had. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Consider this estate planning checklist if you’re curious about what things you should be focusing on right now.

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