Why You Should Have A Trust
Navigating the complexities of real estate and estate planning can be overwhelming, but it's essential to consider the most efficient ways to manage and transfer your assets. One often overlooked but incredibly beneficial option is placing your home into a trust. Not only can this help you avoid the labyrinth of probate, but it also offers a seamless, tax-efficient way to transfer wealth to your heirs. Here’s why establishing a trust should be a critical component of your estate planning strategy. Trust: The Basics A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of beneficiaries. Trusts can be structured in various ways and can specify exactly how and when the assets pass to the beneficiaries. They offer greater control and flexibility than outright gifting or using wills. There are two main types of trusts: revocable (living trusts) and irrevocable trusts. With a **revocable trust**, you retain control over the assets and can modify the trust as needed. On the other hand, an **irrevocable trust** generally cannot be altered once executed and may provide certain tax benefits. Avoid Probate One of the most compelling reasons to place your home in a trust is to avoid probate. Probate is the court-supervised process of authenticating a last will and testament if the deceased made one. It involves cataloging the deceased’s property, paying any remaining debts and taxes, and distributing the remaining property as the will (or state law, if there’s no will) directs. This process can be lengthy, public, and costly. By placing your home in a trust, you can bypass this cumbersome process. The property within a trust passes directly to the beneficiaries without going through probate. This not only saves time but also maintains privacy, as probate proceedings are public record. Being able to avoid probate could result in considerable savings of both money and stress for your loved ones during an already difficult time. Transfer Wealth Trusts are excellent tools for transferring wealth efficiently. When you put your home in a trust, you're setting up a clear, legally binding plan for what should happen to that property after your death. This can prevent disputes among heirs and ensure a smooth transition of assets. Moreover, trusts allow you to stipulate terms and conditions tailored to family needs, such as ensuring that a family home stays within the family for future generations. Another advantage is that a trust can be designed to take effect under specific conditions, such as after reaching a certain age or completing education. This conditional transfer can help protect young or financially irresponsible heirs from squandering their inheritance. Tax Advantages Putting your home in a trust also offers several tax benefits. For one, it can help reduce estate taxes, which can be significant, depending on the value of your estate. By placing your home in an irrevocable trust, the asset is usually removed from your taxable estate. This reduction can potentially save your heirs a significant amount of money on estate taxes. Additionally, assets in a trust often receive a "step-up" in basis upon the grantor’s death, meaning that the property’s value is adjusted to its fair market value at the time of death. This step-up can significantly reduce the capital gains taxes your heirs might owe if they decide to sell the property later. Conclusion Establishing a trust is not just for the wealthy; it is a practical estate planning tool that offers multiple benefits, such as avoiding probate, providing a straightforward way to transfer wealth, and potentially reducing taxes for your heirs. If you want to secure a smooth and efficient transfer of your family home while safeguarding your heirs from legal and financial hurdles, placing your home in a trust should be a top consideration. Taking the time now to place your home in a trust could save you and your loved ones considerable stress, time, and money in the future. Consult with a qualified estate planner to explore the best trust options suited to your unique circumstances and ensure your family's financial security for generations to come.
Do Elections Impact the Housing Market?
The 2024 Presidential election is just months away. As someone who’s thinking about potentially buying or selling a home, you’re probably curious about what effect, if any, elections have on the housing market.It’s a great question because buying or selling a home is a major decision, and it’s natural to wonder how such a major event might impact your plans.Historically, Presidential elections have only had a small, temporary impact on the housing market. Here’s the latest on exactly what’s happened to home sales, prices, and mortgage rates throughout those time periods.Home SalesDuring the month of November, in years when the Presidential election takes place, there’s typically a slight slowdown in home sales. As Ali Wolf, Chief Economist at Zonda, explains:“Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.”This is mostly because some people feel uncertain and hesitant about making big decisions during such a pivotal time. However, it’s important to know this slowdown is temporary. Historically, home sales bounce back in December and continue to rise the following year. In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows after nine of the last 11 Presidential elections, home sales went up the next year (see graph below): The graph shows annual home sales going back to 1978. Each year with a Presidential election is noted in blue. The year immediately after each election is green if existing home sales rose that year. The two orange bars represent the only years when home sales decreased after an election.Home PricesWhat about home prices? Do they drop during election years? Not typically. As residential appraiser and housing analyst Ryan Lundquist puts it:“An election year doesn’t alter the price trend that is already happening in the market.”Home prices are pretty resilient. They generally rise year-over-year, regardless of elections. The latest data from NAR shows after seven of the last eight Presidential elections, home prices increased the following year (see graph below): Just like the previous graph, this shows election years in blue. The only year when prices declined after an election is in orange. That was during the housing market crash, which was far from a typical year. Today’s market is different than it was back then.All the green bars represent when prices rose the following year. So, if you're worried about your home losing value because of an election, you can rest easy knowing prices rise after most Presidential elections.Mortgage RatesMortgage rates are important because they affect how much your monthly payment will be when you buy a home. Looking at the last 11 Presidential election years, data from Freddie Mac shows mortgage rates decreased from July to November in eight of them (see chart below): Most forecasts expect mortgage rates to ease slightly throughout the remainder of the year. If they’re right, this year will follow the trend of declining rates leading up to most previous elections. And if you’re looking to buy a home in the coming months, this could be good news, as lower rates could mean a lower monthly payment.What This Means for YouSo, what’s the big takeaway? While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, says:“Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”For most buyers and sellers, elections don’t have a major impact on their plans.Bottom LineWhile it’s natural to feel a bit uncertain during an election year, history shows the housing market remains strong and resilient. If you have questions, reach out to a local real estate agent. They’re here to help you navigate the market, election year or not.
How an Agent Helps Market Your San Diego House
You’re ready to sell your house. But what do you need most from your real estate agent? Well, the National Association of Realtors (NAR) asked that very question to recent sellers and found one of the top things they were looking for is help marketing their house to potential buyers. Maybe that’s what you need the most help with too.You expect your real estate agent to write a great description of your house for the listing and pair it with some high-quality photos. But that’s not all you’re going to get when you partner with a great agent.They’ll do a lot more to make sure your house stands out. Here are some of the most common methods real estate agents use to market homes according to that same report from NAR (see graph below):So, how can you benefit from your agent using these methods?Listing on the MLS – By listing your house on the MLS, it will get more visibility from other real estate agents and buyers. This could lead to more traffic, which could ultimately help you see an increase in offers and ultimately a better price.Using a Yard Sign – A yard sign catches the eye of people driving or walking by. This method drums up local interest since people who live nearby might have friends or family looking to move into the area. It also prominently displays your agent’s contact information, so interested buyers can get in touch easily.Having an Open House – When your agent advertises and hosts your open house, buyers see others are interested in your house, too. This competition can lead to stronger offers. An open house is also easier for you since you only need to leave once for many buyers to visit. Plus, your agent may get useful feedback on what people like or don’t like, which can help you make improvements to attract more buyers later, if needed.Showcasing on Your Agent’s Website – Having your house visible on your agent’s website allows for a professional presentation of your property. Additionally, people visiting your agent’s website are more likely to be serious buyers who are ready to make a move.Social Networking – Your real estate agent works hard to have a wide-ranging social media presence. Marketing your house this way allows them to reach a large audience. It also makes it easy for people to share your listing with friends and loved ones who might be interested.Providing Virtual Tours – Virtual tours are extremely convenient for buyers, especially those who are relocating from out of town. This method allows them to tour anytime, day or night. It shows your agent is using the latest technology to market your house.There are many tools that can be used to market your house. As NerdWallet sums up:“A good real estate agent will have a robust plan to promote your listing in an effort to find the right pool of buyers. Adding your home to databases of available homes called multiple listing services (MLS), open houses, 3D virtual tours, professional photography and broker tours for buyers’ agents (particularly for luxury homes) are all factors that may go into a marketing plan.”As a seller, it’s smart to work with a creative local real estate agent who can maximize them to make sure you get as many eyes on your house as possible.Bottom LineWhen it comes to marketing your house, working with a pro has tons of benefits. If you’re ready to sell, but don’t know where to start, connect with a local real estate agent.
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