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Real Estate Trusts
Revocable Trust ? If you set up a revocable trust, in most cases your name will be taken out of the trust, a loan will be made directly to your name and once the loan process is complete escrow will put you back into the trust. Reason for this is banks do not like to secure loans to trust as it hard to collect money from thrust once foreclosure occurs. Irrevocable Trust- Because you cannot take out any person our of this trust a loan is made directly to the trust. Few banks will lend directly to the irrevocable trust; however there banks that will do these loans. In both cases a lender will need to review a copy of a trust.
Trusts are also used to avoid probate costs and delays when heirs die. Trusts are created by principal or trustor who transfers title to his/her home, bank accounts, investments and other assets to living trust.
While trustor is alive he or she is managing this trust, fore example refinancing a property, purchasing stocks, bonds etc. Upon death of the trustor or principal, assets are distributed according to a living trust to the heirs. No probate courts cost or any delays are incurred.
When do I need a trust? If you have a significant assets and you want to make sure that they will be passed properly a living trust is recommended. If you own an apartment complex a trust is recommended as well.
Another issue is when married couples hold title to their major assets in joint tenancy with right of survivorship. This is an excellent solution to avoid probate when one spouse dies without first becoming incapacitated. |