Once you buy a house, how will you protect it?

Purchasing a house can be a surprisingly emotional experience, especially for first time buyers. For many people a house is the largest financial investment they’ll ever make. Yet after taking such a big leap, many homeowners neglect to take the next necessary step to protect their home. California law provides that when you die owning assets worth over $150,000, your estate will have to go through probate, which is a court proceeding that determines who inherits your property. The $150,000 threshold is not based on the home’s equity, but rather on the home’s net value, including its mortgage and any other debt. For example, if the net value of your home is $600,000, with equity of $50,000 and mortgage of $550,000, your estate will still go through probate since your home’s net value exceeds $150,000. The problem with probate is that it takes a long time (nine months or more to complete) and delays distribution to your beneficiaries. Furthermore, information in your probate file is readily available to the public, which means that strangers can easily access intimate details about your family and finances. But worst of all, probate is very costly. Using the example above, probate fees (including attorney and executor’s fees) for a $600,000 home are approximately $30,000. Probate fees and delays can be easily avoided if you transfer your home into a revocable living trust during your lifetime. Although you transfer your assets into the trust, you still retain absolute control over them. This means that you can sell your home, gift it or change its beneficiaries. In essence, you can treat the trust property as if you still own it as an individual. The benefit of placing your home into a revocable trust is avoiding probate. Your beneficiaries will inherit your assets without court involvement and in a shorter time span. It has taken you a long to find a house you can call home, why not protect it by putting it into a revocable trust?