What is a living trust on a house?

A living trust is an arrangement under the law in which trust involves the transfer of ownership of, say, a house, into a trust whereas the person placing the property into the trust—the grantor or trustor—is still living. Here's how it works.

1. Key Elements

1. Grantor (Trustor): The person establishing the trust and placing the house in it. He-she manages the trust while alive.
2. Trustee: The person or entity that holds the trust. This is often, though perhaps not always, the grantor for an initial period, with a successor trustee later named to be in charge of the trust in the event of the grantor's death or incapacity.
3. Beneficiary: The person(s) who are going to enjoy the trust. This can be the grantor during life and others, often children or other family members, after death.

2. How it works:

1. Title Transfer: The grantor transfers the title of the house to the trust. In simpler terms, it only means that the house cannot be said to be owned by the grantor in his or her personal capacity anymore, rather under the trust.
2. Control and Use: The grantor usually reserves the right to the house during the life and may occupy, rent, or at will, sell the property. He as well reserves the right to amend or revoke the trust; this is in a case where it is revocable living trust.
3. Avoiding Probate: A living trust has the important advantage of avoiding probate, an otherwise cumbersome and costly court process.
4. Privacy: Because property transferred to a living trust does not go through probate, the transfer of the house will not be made part of public records in probate.
5. In this event, if the grantor were to become incapable, the successor trustee can continue to manage the trust and its assets on the terms of the trust, to manage the care and administration, without interruption.

3. Advantages of a Living Trust for a Home

1. Avoiding probate: Simply as evading the typical probate necessary with a living trust, you don't need to compromise on this to achieve that this way the property goes to the beneficiaries. This saves you time and money.
2. Privacy: Since the courts that oversee probate are public, trust documents will be private in contrast.
3. Management in Incapacity: Allows managing of the house in case of incapacity by assuming the role of the successor trustee. 
4. Flexibility: The grantor can be able to change or even revoke the trust as long as it is revocable. 

4. Considerations 

1. Cost and Complexity: A living trust can be costlier and more complicated to establish than a modest will. 
2. Maintenance: The grantor must make sure that the house and other assets are transferred into the trust.
3. Legal and Tax Implications: One should get an attorney or financial advisor to understand the entire implications.

Considering that, in general, a living trust is a useful vehicle of estate planning; in particular, it helps to ensure that a house and other assets are managed according to its grantor's wishes and passed to the beneficiaries in an efficient and private manner. At One Pacific Trust, our vision is to be the leading provider of trust services.