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Buying and Selling Homes

owned by family trusts

15 years ago

i've noticed that many of the houses in the neighborhood are owned by "family trusts" would you think that those houses would be going up or down in value in the future or do you think it would make a difference???

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Comments (11)

terezosa / terriks
15 years ago
The name on the title or deed has nothing whatsoever to do with the value of a home. A house is only worth what a buyer is willing to pay for it.
xamsx
15 years ago
Why would it have anything to do with the value of the house? Most trusts are in place to shelter assets for one reason or another.
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Having sat through countless estate-planning seminars (I'm a lawyer), I understand all the arguments for revocable living trusts, but I still think they're *way* oversold to middle-income people who don't have a pressing reason for a trust, such as a special-needs child. They can help minimize federal estate taxes - for people who will actually *owe* them. (The exemption as of 2009 is $3.5 million per person, so that doesn't include most of us.) They can't minimize income taxes, help you to qualify for Medicaid, prevent disgruntled wanna-be heirs from contesting your wishes, or protect you from creditors. They do let you bypass probate for the assets that are in the trust, but whether that's a big deal or not depends on where you live. I gather it's a big deal in California, but it's not so big in Massachusetts, for example, where I practice. And remember, not everything you own is included in your probate estate, only things you own individually and that do not have named beneficiaries. Think of an average couple's assets. They have a house, maybe two, held as joint tenants with right of survivorship - not part of the probate estate. They have some IRAs and/or 401(K)s and have named each other as beneficiary - not part of the probate estate. Life insurance? Not part of the probate estate. Bank accounts with joint owners? Not part of the probate estate. For many people, there is very little that *is* included in the probate estate. I'm not saying that you shouldn't get a revocable living trust, but be clear why you want it before you do. Do you and your husband own most things jointly or have you named one another as beneficiaries? Then when the first of you dies, there won't be much to probate. When the second dies? Well, you don't have kids or anyone in particular that you're trying to benefit, so why spend your money now to avoid probate in the future?
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After reading many of these recent comments, meandering here and there as extended threads almost always seem to do, I had to go back to the OP to see what in the world started this thread. It was: "...do you think solely working with a builder would suffice?...I feel like I would be telling an architect exactly what to do as far as design. But I can see where we might need a draftsman to translate our design into a blueprint? Or can the builder fill the role of a draftsman?" It's really the old, often repeated question, "do I really need or have to use an architect, or can I just I just build using my own sketch, which someone translates into dimensioned drawings?..." And the answer, in most U.S. jurisdictions, is yes you can build from your own sketch, assuming you can get design review approval (if required) and a building permit. You may even be able to get financing from your own sketch, or at least from dimensioned drawings of your sketch--depending on the lender and the loan sum to value. And one can usually find an experienced builder who will work with an owner's sketch, and offer to build from it using some sort of construction contract (favorable to the builder's risk, more often than not). There are a number of jurisdictions in the U.S. which do require architectural drawings (by a licensed architect) for design review and/or building permit, particularly for homes over a certain area or storeys, in certain site/soil conditions, or in areas designated for special historical or architectural control, but these are nowhere near the majority of jurisdictions. But at the end of the day, the answer, like so many answers, is really: it depends. It depends on answers to questions like: --Does the site and jurisdiction where you wish to build require documents and calculations from a licensed professional; --Is your budget so limited and critical that a 6%-10% architectural fee is simply impossible; is an initial design consultation of $1K +/- out of the question; --Do you see your house as primarily shelter from the elements and you have no other strong concerns or desires about it; --Do you or anyone in your family have special needs; --Are you a rugged and experienced DIY person who gets personal reward from doing everything yourself; have you ever designed and built a house before; --How concerned are you about a fixed or manageable construction budget, and the level/type of construction expertise and features you will actually receive for your project? There are other important and useful questions, but hopefully the point is clear: using your own sketches for construction of a home depends on the answers to these and other important questions. And since no two of us are alike or in the same circumstances, the answer to using one's own sketch for building is, wait for it...it depends. And like all decisions, there will be a series of consequences which occur based on the decision that each of us may make in this type of situation. PS: And I guess I have to say that CAD, the computer and all of our disruptive technology neither pose any important questions in a situation like this, nor do they provide any particularly useful answers. They are simply a tool, a means to an end, and certainly not the end.
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I'd never considered it, but I know my kids would take on our pets-they're all pet lovers/owners themselves and when my son had to give up his cat & dog, they went to family. I think it's very wise of you with those long lived birds to consider this option. My dear friend had a small bird (I don't know birds, it wasn't a canary and it was smaller than a cockatoo) and she came down with terminal cancer. Fortunately a coworker and his wife were bird rescuers and they took in Rio. My friend did leave a small stipend for her bird's care, but the couple insisted it would not be a burden for them. I have another friend who has a tortoise, she (the tortoise) is currently 19 years old, and will likely outlive my friend. She's got a network of folks willing to take on her unusual pet, but I might ask her if she's got some kind of provision for the tortoise as she's a single woman with no family but a brother.
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Talk to the Trustee and a lawyer. Often the trustee has much discretion in the interests of the beneficiaries and a lawyer can navigate the process. Without seeing the actual trust document there's really no way to analyze. It may be possible for the trust to build the house for your benefit or sell you the land on which you are building the house. Lots of variables, including other beneficiaries. Don't give up without talking to the trustee and a lawyer. It may be possible (or not). However, you aren't going to get an answer here on an Internet forum especially without disclosing the exact terms of the trust (don't please).
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marys1000
15 years ago
I think the only difference it might end up making is if the trust doesn't do a good job of keeping the place maintained.
duluthinbloomz4
15 years ago
Jeez Louise. People/families who have trusts live in houses and maintain them/or don't maintain them pretty much the same as those who don't have trusts. Holding assets in a trust does not guarantee any values - up or down - or force the trust holders to take any special precautions with any asset. I have a self directed revocable living trust and I can run my assets into the dumpster if I want to do so. A trust is merely an instrument that pretty much guarantees one's assets will pass to heirs(in whatever condition at the time of death) as dictated by will and trust without the hassle of probate.
marys1000
15 years ago
People/families who have trusts live in houses and maintain them/or don't maintain them pretty much the same as those who don't have trusts.

I know that duluth - don't get your panties in a bunch. All I meant was - trust or no trust the value of the house depends on things like maintance. And while some trusts may be different and may be run by a more disinterested 3rd party, or joint between squabbling siblings whatever.
lascatx
15 years ago
A family trust may be a living trust -- a way to avoid some of the hassles and expenses (including taxes) associated with probabte. They wouldn't have any impact on property value -- except to the extent that they don't get hung up in probate and may be easier and faster to sell.
heimert
15 years ago
I think it is rare for a house to be held by a trust with a disinterested 3d party as trustee. It makes little sense. Most of the family trusts your seeing are the revocable types used to avoid probate. It's possible there are some set up so that the parents could buy a home for their child. The rarest case would be some sort of "family home" for which multiple children have a partial interest, but that's pretty rare and more typical in vacation areas.

So I don't think it's something to give much thought to--I suspect you're just as likely to have a plain ol' owner let his property rot as you are to have a trust let the property rot.
bethesdamadman
15 years ago
lascatx: "A family trust may be a living trust -- a way to avoid some of the hassles and expenses (including taxes) associated with probabte."

That's a common misconception. For the most part, having a revocable living trust has little or no effect on taxes.
lascatx
15 years ago
Not ordinary income or property taxes, but inheritance taxes and costs associated with probate, yes.
bethesdamadman
15 years ago
No, I'm sorry. You're still wrong. That's the common misconception to which I was referring. Revocable living trusts for the most part do not have any bearing on the payment of inheritance taxes either. (Now, there is a particular set of circumstance where a bypass trust can help, but that is an exception.)

If you still don't believe me, just google revocable trust and estate or inheritance taxes and you'll see for yourself.

The main benefit of a living trust is the avoidance of the hassle and expense of probate. Taxes do not come into play.
jlhug
15 years ago
bethesdamadman is right. A revokable living trust will not stop an estate from paying inheritance taxes on the Federal level. It does allow the estate to bypass probate and the possible revealing of assets to the public.

It appears you might be in California which may have different laws regarding revokable living trusts but California law will not stop one from having to pay Federal taxes.

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