With just about every bank and financial institution currently running “stress tests” on their portfolios, you would think the standard of our banks is getting better. If this were true, then why would you put your house in a trust?
The answer to that question is pretty simple: because you don’t trust them. And because they haven’t been under such intense scrutiny yet, you don’t think they can be trusted to keep your home in order. Well, if you are not currently in a situation where you are concerned about your home and what happens to it if you lose your job, then you may have an accurate assessment of banks and mortgages.
Trust is a very, very tricky thing. That said, when you are putting your house in a trust, you are trusting someone else to be custodian of your assets, including your home.
For most of us, as a big part of our lives, is our home. To sell or rent it, or even move it, is a big concern for many of us.
So why would you put your house in a trust? You are setting up a trust to take care of your real estate property, which means that while you remain the owner of your home, the trust will be responsible for maintaining it.
This process gives you the peace of mind that there is someone on hand who will be keeping watch over your assets and making sure that they are being well-managed. The assets themselves are under the control of the trust, so there is no need to worry about whether they are being used appropriately. If you decide to sell your home in the future, you won’t have to worry about trying to sell it yourself because the trust will have the resources to help you with that.
It also helps to give the trust a healthy degree of independence. The financial institutions that set up trusts aren’t really that concerned about whether your house in a trust is in good hands. They will be happy to receive any profits, or even just a portion of those profits, if you elect to turn your home into a trust.
Most people who choose to go with this method of dealing with their real estate property may worry about any potential conflicts. However, for a trust to work, it has to be managed by one individual. If you have a long-term partner, for example, he or she will likely be able to help with day-to-day tasks such as paying the bills.
If you decide to sell your home in a trust, it would be a good idea to give the relationship a little more thought than it would if you were going into a sale of ownership. While it would be a little awkward at first, after a few years, the two of you will have developed a strong bond. This is exactly the kind of thing that a trust is designed to do for the beneficiary.
One big concern for many people when it comes to real estate investing is how the interest rates are doing. When buying into the market, we want to buy when we are getting the best possible return for our money.
With a trust, if interest rates go up, the trust will receive a greater return from the trust’s assets than it will with the bank’s balance sheet. In a home-equity loan, you would expect the bank to pay you interest rates based on the Federal Funds Rate, but a trust will simply pay you a higher return than the bank.
When it comes to our homes, and whether to put them in trust or take a mortgage, a trust may be the way to go. When you ask, “Why would you put your house in a trust?”