If you’ve ever wondered why you would put your house in a trust, you’re not alone. It’s kind of a complicated legal process, but it does have a few benefits. Most people think that if they simply own their homes, it’s enough.

However, if you’re older and your home is of significant value, you might want to protect your family from a lengthy probate process after your death. This is the main reason that you would choose to place your home into a living trust.

However, sometimes people think that they can protect their homes from creditors or taxation by placing it into a trust, but this isn’t the case.

Here’s what you really need to know about putting your house in a trust.

Trust Terms: Words to Know

There are some basic words to know when speaking about trusts. Just to make sure everyone is on the same page, please commit the follow terms to memory (at least for the purposes of this article):

Trust Grantor

This is the person who sets up the trust. They also fund the trust. The funds could be “liquidated” which means which literal money, or “assets” which are possessions with value. In this case, the asset would be a house.

Trust Beneficiary

This is the person who will eventually benefit from the trust. This means that when the trust is dissolved, either by direct order of the grantor or by the passage of time, that the person receives ownership of everything in the trust.


This is the person who manages the trust. While the trust is active, they make sure to manage the assets and follow the exact wishes and instructions of the person who set up the trust (the grantor). Sometimes, the grantor and the trustee are the same person.

If this is the case, then the trust document outlines a backup plan. This is just in case they pass away or become unable to do the job in any way.

Probate Process

Probate is the term for the “post-death” distribution of assets. In easier terms, this means that when you die, a representative of the court takes a look at everything you own and decides who gets it next. If you designated a person to do this for you (called an executor), then the court will partner with them throughout the process.

The kinds of people who end up with your assets would be creditors (like the bank) or inheritors (like friends and family).

What Is a Living Trust?

It’s a legal document that says exactly what you want to happen to all of your assets. Kind of like a will. The big difference between a living trust and will is that a will only because effective after you die and then must be managed by the court. In a trust, your trustee can enact the document’s wishes immediately.

Sometimes, you might hear the term “revocable trust” used instead of living trust. Not to worry, these are the same thing. Based on the name, you should be able to tell that a living trust can be changed or completely deleted any time by the person who created it.

If you put a home into a living trust, this means that the grantor (or co-grantors, for example: a married couple) can take the house out of the trust, sell the house, refinance the house, etc. They can do all of this without any legal consequences simply due to the fact that they are the grantors.

An “irrevocable trust” on the other hand, is unchangeable. If you use one, it means you are permanently giving up your rights to that asset. Most people never use these because most people don’t have enough assets that they would just want to start giving them away so early on.

Should I Get My Family Involved in the Process?

There is usually a lot of family politics involved when you set up a trust. Typically, feelings will get hurt over who you name beneficiary and who you essentially make “in charge” by appointing trustee.

To avoid this, here is what we recommend that you do instead: you should nominate a neutral third party as your trustee. This person should not be a family or a friend, but rather a corporate trustee — someone who has no emotional involvement in the situation whatsoever.

This is a great idea for multiple reasons. The first is that being the trustee is a lot of hard work! There is a lot of legal information to wade through and, if you do something wrong, big consequences. If you’ve never done it before, it can be especially overwhelming.

So, if you pick a third party, you are relieving your loved ones of a lot of hard work. You are also ensuring that the probate process is likely run a lot smoother. But most importantly, you are saving your family from the risk of any squabbles (or wars!) over perceived favoritism or bad form in the distribution of the assets in the trust.

What Are the Benefits of Putting Your House in a Trust?

One cool benefit of a living trust is that it is able to give its beneficiaries is a “step-up” basis when the grantor dies. What this means is that the taxable value of any property the beneficiary inherits will remain the same as its value on the day of the grantor’s death.

So, if the beneficiary decides to later sell that property, the capital gains taxes will be little to none. If you gift an asset while you are alive, it doesn’t have this benefit.

The other benefit of putting your house in a trust, as mentioned, is the opportunity for your beneficiaries to avoid the probate process after your death. Probate can take a long time, usually at least a few months and sometimes up to a year.

Sometimes, this process can even cost you anywhere from 3% to 7% of your entire estate! By placing your home is a trust, you can avoid this altogether.

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What Are the Drawbacks of Putting Your House in a Trust?

While it’s not really a con, per se, it is important to remember that a living trust is changeable. So, since you have access to your assets at any given time, you are not allowed to remove the home from taxable estate at your death, nor is the asset safe from creditors who may have a claim against it.

Things You Should Think About in Advance

Here are a final few things to think about before you put your home into a trust:


You can’t sell your home or refinance it while it’s in the trust. If you want to do either of these things, you will need to remove it. This also applies to taking out equity in your home.


When you put your home in a trust, your insurance coverage might change. Be sure to check with both your title and homeowners insurance to see if you need to alter your coverage or plan as you transition from homeowner to trustee.


You want to be sure that placing a home into a trust won’t trigger a revaluation of the amount of property taxes that you have to pay on a home. Sometimes when you put a home into a trust, the state doesn’t consider it your primary residence anymore.

Overall, be sure to talk to your lawyer to see if putting your house in a trust is right for you.