Family Trusts: Why are so many properties listed this way? (foreclosure, mortgages)

[Brookside]

I've been doing a ton of research in prep for homebuying -- noticed that quite a few properties are owned by "family trusts."

What are these, exactly? And why are so many homes owned by (or have their mortgages held by) them? I suppose there is some kind of tax benefit to this.

Thanks for any info!

[loves2read]

not a tax benefit as much as "estate" benefit but frankly from what I understand because of the inheritance laws in TX it is only people with pretty high net worth and who maybe own other physical properties/businesses who really have a need for that type of configuration

BUT there are plenty of lawyers/advisors who tell people it is a good idea

[Brookside]

Thanks L2L -- I sort of assumed that "high net worth" was the case, and if so -- perhaps a home owned in trust might have a little more room for negotiation (in that the seller is perhaps not desperate for revenue from the sale, either to fund a new purchase or avoid foreclosure, bankruptcy, etc.)

Of course it also could mean they will sit tight and hold out for asking price ...!

I wonder if it's also a way to protect assetts from bankruptcy? Exg., if it's in trust, then it can't be seized/foreclosed upon? Hmmmm

[escanlan]

Brookside,

Yes, trusts are used not only for bankruptcy purposes but also for protection against civil judgments and seizures. Trusts are also a good way to easily shift property ownerships around quickly and a host of other potentials. If properly created a trust will allow a person to enjoy the tax advantages of owning the home without some of the other downsides (as described).

If you're considering buying a home from a trust it is not a lot different from any other home sale. If you are looking at buying a home and can afford to create a trust then it might be worth looking into. Speak with a good RE Attorney who deals with trusts and they can give you all of the details, advantages and disadvantages.

[momof2dfw]

A typical will is no longer worth much. If you have a house/property/etc then a trust is the way to go. It is simply a "Family Living Trust" and in it is EVERYTHING that would happen if you or your spouse should pass away. With a trust there is no will to be probated, the property does not change hands to the heirs as the trust still owns it. Only the trustees of the trust change. Your kids guardians are named in there as well as all of your power of attorneys and such. It really is a VERY WISE investment to make and can save your family a lot of heartache should/when something happens to you. It is not just our state laws for inheritence that deem this but federal as well. There really is no tax benefit except for when one passes away so the heirs don't have to pay an inheritence tax. Not only will your house and other property be in the name of the trust but it will also be on your bank accounts. This keeps your accounts from being frozen when something happens to you. Your heirs still have access to it to take care of things and the only thing that changes is the names on the account but it is still in the name of the trust with the new trustees listed.

EVERYONE should have a "Family Living Trust" whether they own property or not if they have kids or anything they want to protect to hand down to their heirs.

[ATLHRLGUY]

Well b/c of the laws in tx it is really no need to put your "primary" home in a trust. If you're being sued no can take your "primary" home to collect debt. But I understand others that come from non-debtor friendly states wanting to put their home in a trust. Besides the obvious reasons another reason for doing so is that if you are a celebrity or high net worth individual it would be harder for others to look you up (assuming the name of the trust isn't your own name i.e. "insert your name" family trust). On a separate but similar note, keep in mind, whether you're in TX or another state the best protection you could have is an irrevocable trust and not a revocable trust. A revocable trust gives you flexibility but still leaves you somewhat vulnerable in matters such as divorce, lawsuits etc. But make sure everything is how you want it in the irrevocable trust b/c it's...irrevocable.

[texas13]

How can someone still received Homestead Exemption and Over 65 Exemption after the person has passed and property passed onto the heirs?

[GayleTX]

You don't have to be wealthy to benefit from a family trust.....you can keep your heirs from having to sell the property to pay the inheritance taxes and give up something that their parents/grandparents have owned for generations. It's especially important in farm land or business....my husband put his labor and his own money (that he earned at a job in town) into his parents' farm for 30 years knowing that it would be his someday - if they had not put it in a family trust he would have had to sell it to pay the inheritance taxes on it. And the land and all his years of his work he invested in it would have been gone to the government. The situation is probably going to get worse since the government is now brainwashing everyone to resent and hate anyone who owns anything or who looks like they might own a little more than someone else.